Kazakhstan’s National Bank holds base rate steady

Kazakhstan’s National Bank has decided to keep the base rate unchanged at 16.5%, meeting experts’ and market players’ expectations during today’s monetary policy session.

According to the regulator, the move was justified as monthly dynamics have demonstrated the first signs of stabilization. In March, inflation slowed to 1.3% compared to 1.5% in February. The core inflation rate (0.9%) and the seasonally adjusted inflation rate (1%) show similar trends.

However, the current seasonally adjusted inflation is still accelerating. The rate has already reached 14.2% on an annual basis, the National Bank reported.

«This trend is supported by the continuation of tariff reforms, procyclical fiscal stimulus and sustainable consumer demand,» the regulator noted.

Amid high global prices for food and double-digit inflation in Russia, which is the key trading partner for Kazakhstan, the overall situation remains pro-inflationary, the National Bank underlined. It also believes that inflation in developed economies has been slowing since the beginning of the year, although uncertainty is growing.

«Growing uncertainty and risks of declining demand in the global economy due to U.S. trade policy have already caused a significant drop in oil prices and sparked financial market volatility,» the regulator noted, referring to the tariffs imposed by U.S. President Donald Trump against almost the entire world, including Kazakhstan.

The National Bank highlighted that pro-inflationary risks still remain in the country, driven by high inflation expectations, price liberalization and an anticipated tax burden.

According to the regulator’s forecast, aggregate monetary conditions will continue to be moderately tight to mitigate the flow of demand and support the inflation slowdown trend.  

«Taking into account the balance of inflation factors, its current dynamics, pro-inflationary trends and high level of global uncertainty, there is no basis for lowering the base rate anytime soon,» the National Bank concluded.

Among experts interviewed by the Association of Financiers of Kazakhstan, 75% of them had predicted the base rate would remain at 16.5%. Other respondents considered the possibility of an increase to 17%, but not a single expert expected the rate to be reduced.

Sanzhar Kaldarov, an analyst at Halyk Finance, also advocated for keeping the base rate unchanged. According to him, professional market participants didn’t expect the regulator to raise the base rate from 15.25% to 16.5% in March.

«The key challenge is that the current monetary policy is becoming less predictable, which consequentially hinders the forecasting of future base rate decisions, undermining the trust of market players,» Kaldarov said.

He also noted that the base rate would likely remain at the same level until the end of the year. Halyk Finance estimates that ideally the base rate should be at 15% by the end of 2025.

At the previous session on March 7, 2025, the National Bank raised the base rate by 1.25 percentage points from 15.25% to 16.5%. The regulator backed the move with the rapid acceleration of inflation in the country (with annual inflation standing at 9.4% in February and 10% in March) and external price pressure due to surging inflation in Russia.