Kazakhstan Monetary Policy June 2017

Kazakhstan

Kazakhstan: Central Bank keeps rate stable in July

July 17, 2017

At its 17 July monetary policy meeting, the National Bank of Kazakhstan (NBK) decided to keep the one-day repo rate—also known as the base rate—unchanged at 10.50%. This decision contrasts the 50-basis-point-cut in the June meeting. The base rate has been lowered by 650 basis points since the Bank started its easing cycle in May 2016.

The decision reflected more stable economic conditions, which led inflation to fall to within the Bank’s target range of between 7.0%–8.0%. While inflation expectations are well anchored, potential risks stem from developments in the food market and volatility in global commodity prices. On the exchange rate market, the Bank noted that depositors are increasing their holdings in the national currency, the tenge, in a sign of renewed confidence on the Kazak economy.

In providing some guidance, the Bank stated that monetary conditions remain neutral and that the ongoing disinflationary trend gives policy makers room to deliver further cuts in the main policy rate in the coming 12–18 months. The next monetary policy meeting is scheduled for 21 August.

The Consensus view among the analysts we surveyed is that the Central Bank will continue easing its monetary stance this year. FocusEconomics Consensus Forecast panelists see the base rate ending this year at 9.70%. Going forward, the Central Bank should continue trimming the interest rate, and our panelists see the rate ending 2018 at 8.53%.


Author: Ricard Torné, Head of Economic Research

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Kazakhstan Monetary Policy Chart


Kazakhstan Monetary Policy July 2017

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


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