The Atyrau bridge in Kazakhstan

Kazakhstan Monetary Policy April 2019

Kazakhstan: Central Bank cuts the rate by 25 basis points in April meeting

At its latest monetary policy meeting held on 15 April, the National Bank of Kazakhstan opted to cut the rate by 25 basis points to 9.00%, with an interest rate corridor of plus or minus 1.0 percentage point, following a six-month hold. In a move that was largely expected by analysts, the rate was trimmed after the newly-instated President Kassym-Jomart Tokayev mandated the availability of cheaper credit.

With inflation trending downwards and inflation expectations also falling, the Bank had some space to ease monetary conditions in a bid to accelerate the pace of growth. Inflation remained at an over three-year low of 4.8% in March, with lower fuel costs and softer upturns in the prices for paid services keeping overall price pressures subdued. Meanwhile, economic activity grew at a softer stride, on average, in the first two months of 2019, compared to the previous quarter. A downturn in the manufacturing sector, largely due to China and Russia’s slowdown, caused overall activity to weaken. The economy is also grappling with lower oil production—due to maintenance works at the Kashagan, Karachaganak and Tengiz oil fields—which has constrained oil revenues.

Looking ahead, while the accompanying statement was devoid of forward guidance, future decisions will be guided by the trajectory of inflation relative to the 4.0%–6.0% target band and the Bank’s forecasts, along with overall economic conditions and external factors.

The next meeting is set for 3 June 2019.

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