The Atyrau bridge in Kazakhstan

Kazakhstan Monetary Policy December 2018

Kazakhstan: Central Bank keeps base rate on hold at 9.25% in December

At its 4 December monetary policy meeting, the National Bank of Kazakhstan left the base rate at 9.25%, with an interest rate corridor of plus or minus 1.0 percentage point, after the rate was raised to its current level from 9.00% in its October meeting.

A slowdown in inflation going into the fourth quarter, coupled with well-anchored inflation expectations, motivated the Central Bank to keep the key interest rate on hold. Inflation fell from 6.1% in September to 5.3% in October and November, edging closer to the lower limit of the Bank’s 5.0%–7.0% target band, owing to a seasonal drop in the prices for food and fuel, along with reduced tariffs on regulated services. While inflation is expected to remain within target, the primary risk to the inflation outlook likely stems from uncertainty around future oil prices and the tendency towards a rise in inflation in the country’s main trading partners. This comes against the backdrop of firm economic activity, thanks to higher oil prices and buoyant demand supported by strong credit growth and rising incomes.

In terms of forward guidance, the Bank is expected to maintain a neutral stance going into next year to keep inflation within the revised target corridor of 4.0%–6.0%. The next monetary policy meeting is scheduled for 14 January.

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