Loans and deposits: what to expect from the National Bank's new decision

Kazakhstan's National Bank is widely anticipated to maintain its base interest rate at 17 percent during its next monetary policy meeting. This decision follows a one-percentage-point reduction in early June, which brought the rate down from 18 percent.

At the June meeting, the National Bank cited a steady decline in inflation and moderating public inflation expectations as key factors. The strengthening of the national currency, the tenge, and global oil prices exceeding forecasts also played a role. While acknowledging a moderate rise in global food prices, the bank revised its year-end inflation forecast downward.

Despite the previous easing, inflationary risks remain, leading most experts and market participants to predict a hold at the current 17 percent level. Economist Ruslan Sultanov highlighted external uncertainties, such as rising oil prices and the monetary policies of major global central banks, as factors the National Bank must consider alongside domestic inflation.

Some analysts, like those at BCC Invest, foresee a potential rate reduction to 16.5–16 percent, but not until September. The National Bank's subsequent meeting is scheduled for September 4. Expectations are that the rate will likely remain at that level through the end of the year, as ongoing inflationary pressures are expected to preclude further cuts.

A survey by the National Bank itself among market professionals indicated that expectations for the base rate are stabilizing. Respondents anticipate the rate to settle at 16 percent by the end of 2024, decreasing to 12.8 percent in 2027 and 10.6 percent in 2028. The base rate is crucial as it serves as a benchmark for the entire banking sector, influencing interest rates on loans, mortgages, and deposits for all Kazakhstanis.

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The inflation rate remains the key metric for base rate decisions.