The Atyrau bridge in Kazakhstan

Kazakhstan Monetary Policy July 2022

Kazakhstan: Central bank raises its policy

At its latest meeting on 25 July, the National Bank of Kazakhstan (NBK) decided to raise its base rate by 50 basis points to 14.50%, following its decision to stand pat in early June. Meanwhile, the interest rate corridor was kept at plus or minus 1.0 percentage points.

This decision was driven by above-target inflation as well as accelerating inflation expectations. Inflation remained in double digits across May and June, with the median inflation expectation for the year ahead rising to 14.9% in June from 13.8% in May. Supply chain disruptions, currency depreciation and external inflationary pressures have driven prices upwards in recent months. Inflation has been further stoked by strong internal demand associated with elevated government spending in late Q2.

Looking ahead, our panel expects a further 25 basis points of tightening by the end of the year. The Bank said that inflation had yet to peak: It is projected to continue rising until Q1 2023. The Bank stated that future monetary policy decisions would be contingent on its economic forecasts, as well as the balance of risks in the global and domestic economy. The next monetary policy meeting is scheduled to take place on 5 September.

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