Kazakhstan Monetary Policy August 2017


Kazakhstan: Central Bank lowers rate in August

August 21, 2017

At its 21 August monetary policy meeting, the National Bank of Kazakhstan (NBK) decided to lower the one-day repo rate—also known as the base rate—from 10.50% to 10.25% with a window of plus or minus 1% as inflation continued to decelerate and prices across commodity markets stabilized. The base rate has been lowered by 675 basis points since the Bank started its easing cycle in May 2016.

The Bank’s decision to lower the rate, after having held it steady at its July meeting, was attributed to a further decline in inflation due to lower food prices and was consistent with the Bank’s forecast for decelerating inflation over the medium term. Moreover, economic conditions continued to improve, underpinned by a growing external sector and robust domestic demand.

In regard to forward guidance, the Bank stated that monetary conditions remain neutral and in line with the Bank’s expected long-run economic growth rates. One important forward guidance provided in the communiqué was that given current uncertainty and volatility of external conditions, the Bank has “reconsidered the possibility of the further reduction of the base rate in the short run” signaling that the Bank could stand pat at its next meeting. The next monetary policy meeting is scheduled for 9 October.

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 9.51%. Going forward, the Central Bank should continue trimming the interest rate, and our panelists see the rate ending 2018 at 8.25%.

Author:, Economist

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