Kazakh National Bank Lowers Base Rate to 17%

Kazakhstan's National Bank has reduced its base rate to 17% per year, a decision driven by moderating inflation and revised economic projections. The Monetary Policy Committee cited easing inflationary pressures as a key factor in this adjustment.

Annual inflation in Kazakhstan has shown a consistent downward trend, standing at 10.4% in May, a significant decrease from its peak of 12.9% last September. This disinflation is attributed to slower food price growth, stable non-food inflation supported by a stronger tenge, and continued easing in service sector inflation. Monthly inflation also slowed to 0.7%, and while inflation expectations remain elevated, they have stabilized in recent months.

The bank has also upgraded its GDP growth forecast for the year to 4.5-5.5%, up from previous estimates. This upward revision is supported by stronger economic activity and more favorable external price assumptions, including an upward revision of the oil price assumption to $90 per barrel for the current year. Inflation is now projected to fall into single digits within this year, with a medium-term convergence toward the 5% target.

Future monetary policy decisions will hinge on incoming inflation data, domestic demand conditions, fiscal developments, and external risks. The National Bank has scheduled its next decision on the base rate for July 24.