Kazakhstan Monetary Policy November 2017


Kazakhstan: Central Bank holds base rate put in November

November 27, 2017

At its 27 November monetary policy meeting, the National Bank of Kazakhstan (NBK) kept the one-day repo rate—also known as the base rate—unchanged at 10.25%, with a corridor of plus or minus 1%. The decision was expected by market analysts.

Increased price pressures propelled inflation to 7.7% in October from 7.1% in September, but it remained within the Bank’s target range of 6.0%–8.0%. The Bank attributed the rise to short-term factors, namely higher energy prices triggered by a temporary supply drop, and a seasonal upturn in food prices. It projects inflation will end this year within target. Moreover, expectations regarding the evolution of inflation remained within the 5.0%–7.0% target band set for next year.

Against this backdrop, the Bank decided to hold the rate put, but it remains cautious about upward price pressures stemming from the external sector. It is also concerned that the increase in energy prices will persist over a longer period and feed into higher inflation expectations. The recent developments prompted the Bank to revise its inflation forecast upwards to 6.9% for 2018.

The Bank’s statement was devoid of substantive forward guidance, only noting that the developments warrant maintaining “the neutrality of the monetary policy conditions” and the real interest rate at a level that is consistent with the economy’s long-term potential growth. The next monetary policy meeting is scheduled for 15 January.

The Consensus Forecast view among the analysts we surveyed is that the Central Bank will continue easing its monetary stance. FocusEconomics panelists see the base rate ending 2018 at 9.00%. Going forward, the Central Bank is expected to continue trimming the interest rate, and our panelists see the rate ending 2019 at 8.33%.

Author:, Economist

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Kazakhstan Monetary Policy Chart

Kazakhstan Monetary Policy November 2017

Note: NBK base rate in %.
Source: National Bank of Kazakhstan (NBK).

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