The Atyrau bridge in Kazakhstan

Kazakhstan Monetary Policy June 2019

Kazakhstan: Central Bank holds fire in June meeting as inflation picks up

The National Bank of Kazakhstan held the base rate at 9.00%, with an interest rate corridor of plus or minus 1.0 percentage point, at its latest monetary policy meeting on 3 June. The decision follows a rate cut by 25 basis points at its previous meeting on 15 April.

Within-target inflation and relatively low inflation expectations prompted the Bank to stay put. Inflation climbed to 5.3% in May from 4.9% in April, lifted by a broad-based upturn in prices but mainly reflecting higher food costs. Rising price pressures limited the room for another rate cut despite growth dynamics showing signs of weakness and the economy slowing in the first quarter due to faltering industrial activity.

The communiqué was devoid of substantive forward guidance and indicated only that future decisions will be guided by the Bank’s expectations on the trajectory of inflation relative to the 4.0%–6.0% target band, along with overall economic conditions and external factors. The Bank did note, however, that key downside risks to inflation stem from increasing supply and falling demand, while the main risk on the external front stems from the impact of the U.S.–China trade conflict. FocusEconomics panelists see the rate being slashed again before year-end.

The next meeting is scheduled for 15 July 2019.

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