Kazakhstan: Central Bank holds base rate in June
The National Bank of Kazakhstan (NBK) decided to keep the base rate steady at 9.50% at its monetary policy meeting on 8 June, after having slashed it by 250 basis points in April in the wake of Covid-19. Accordingly, the Bank also decided to keep the interest rate corridor unchanged at plus or minus 2.0 percentage points around the base rate.
Behind the pause was a stabilization in the economic backdrop in recent weeks, as oil prices recovered from historic lows and the global economy began to take steps towards normalization as countries emerged from lockdowns. That said, the picture still remains bleak as lockdown measures take their toll on the economy and the NBK revealed that it now expects GDP to fall 1.8% this year, below its previous projection of 1.3%. Moreover, the Bank stressed that it expects the current account deficit to widen by year-end on the back of low oil exports due to the weak global economy, which could put upward pressure on the tenge.
Looking ahead, the NBK struck a cautious tone stating that further easing will depend on a decrease in uncertainty regarding the external backdrop and currency pressures.