The Atyrau bridge in Kazakhstan

Kazakhstan Monetary Policy March 2020

Kazakhstan: Central Bank hikes the base rate to a near-four-year high in March as Covid-19 hits the external sector

At an emergency meeting on 10 March, the National Bank of Kazakhstan hiked the base rate from 9.25% to 12.00%, its highest point since February 2017. Moreover, it expanded the interest rate corridor to plus or minus 1.5 percentage points, from a previous interest rate corridor of plus or minus 1.0 percentage point.

The Bank’s decision reflected the need to maintain price stability in the face of a deteriorating external backdrop due to the global spread of Covid-19. Muffled demand from China and the European Union as the pandemic hits economic activity, coupled with the steep fall in oil prices prompted by Saudi Arabia launching a price war against Russia on 8 March, is set to dampen oil exports and weigh on the tenge ahead, in turn exacerbating pass-through inflation.

Looking ahead, the Bank reassured its commitment to the free-floating exchange regime, while also highlighting its commitment to intervene in the FX market if necessary. In addition, the Bank remains prepared to take further measures to ensure fiscal stability.

The next meeting is scheduled for 16 March.

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