Most analysts and market experts expect the National Bank of Kazakhstan to cut its base rate for the first time in nearly eight months. Forecasts from Freedom Broker, Halyk Finance, and the Association of Financiers of Kazakhstan (AFK) all point to a rate reduction.
Majority of experts expect a cut
A majority of financial market professionals (56%) surveyed by the AFK expect the National Bank to lower the base rate from the current 18% to 17.5% at its June 5 meeting, citing a moderation in annual inflation to 10.4%.
The remaining respondents expect the rate to remain unchanged at 18%, arguing that tighter monetary policy is still needed to strengthen control over inflation. AFK members forecast that the base rate will decline to 15.75% over the next 12 months.
Forecasts vary among analysts
Investment firm Freedom Broker also expects a rate cut, though it projects a larger reduction of 1 percentage point, bringing the rate down to 17%. According to the firm, continued easing could contribute to further strengthening of the U.S. dollar against the tenge.
Meanwhile, Halyk Finance noted that annual inflation fell to its lowest level since spring 2024 at the end of May. The firm expects the National Bank to take a more cautious approach and lower the base rate by 0.25 percentage points to 17.75%.
Analysts at Halyk Finance said such a move would represent a measured technical adjustment, reflecting the gradual slowdown in inflation while maintaining a relatively high positive real interest rate.
What the base rate means
The base rate is effectively the «price of money» in the economy. It determines the rate at which the central bank lends to commercial banks and accepts deposits from them.
When the National Bank raises the base rate, borrowing costs for banks typically increase, making loans more expensive for businesses and consumers and reducing demand for credit. When the rate is lowered, the opposite generally occurs, helping to stimulate lending and economic activity.
