National Bank of Kazakhstan Cuts Base Rate to 14.50%
The National Bank of Kazakhstan has announced a decision to reduce the base rate by 25 basis points to 14.50% per annum, with a corridor of +/- 1 percentage point, as reported by the bank’s press service on May 31.
The annual inflation rate in April slowed down to 8.7%, in line with forecasts. However, inflation expectations saw an increase after two months of decline, influenced by changes in food prices, a flood situation, and ongoing reforms in housing and communal services.
The external inflationary background is considered neutral, reflecting the impact of contractionary policies by central banks and price dynamics in global food markets.
The forecast for oil prices assumes an upward revision to an average of $85 per barrel in 2024, driven by factors such as OPEC+ production cuts, stable U.S. production, and geopolitical uncertainty in the Middle East. In the medium term, oil prices are expected to gradually decline, with averages projected at $80 in 2025 and $77 in 2026.
In terms of inflation, the forecast for 2024 remains within the range of 7.5-9.5%, while for 2025 it is set at 5.5-7.5%. By 2026, as fiscal stimulus eases and monetary conditions tighten, inflation is expected to approach the 5% target.
Economic growth in Kazakhstan for 2024 is expected to be in the range of 3.5-4.5%, supported by factors such as consumer lending, investment activity in the non-oil sector, and growth in real incomes due to fiscal stimulus. Forecasts for 2025 and 2026 have been adjusted due to the postponement of the Tengizchevroil expansion project, with expectations lowered to 4.8-5.8% for 2025 and increased to 4.9-5.9% for 2026.
NBK Governor Timur Suleimenov emphasized the importance of maintaining a moderately tight monetary policy to achieve the established inflation target of 5% in the medium term. This approach aims to consolidate the progress made in slowing down inflationary processes.
