Kazakhstan: Central Bank stands pat after hiking rates in previous meeting earlier in March
At its 16 March meeting, the National Bank of Kazakhstan decided to maintain the base rate at 12.00%, its highest point since February 2017, while keeping an interest rate corridor of plus or minus 1.5 percentage points. Nevertheless, the decision followed a 275-basis-point hike delivered in an emergency meeting on 10 March, which also widened the interest rate corridor from plus or minus 1.0 percentage point to the current plus or minus 1.5 percentage points.
In its communiqué, the Bank highlighted that the hike delivered earlier in March managed to curtail the spread of panic in the domestic market, while also limiting the possibility of speculative pressure on the tenge through higher lending costs. Moreover, the Bank intervened in currency markets to stabilize the currency and insulate the economy from higher pass-through inflation as the financial turmoil prompted by the Covid-19 pandemic and plummeting oil prices weighs on the currencies of emerging and oil-producing countries.
Looking ahead, the Bank projects inflation will breach the upper bound of the 6.0%–8.0% target band this year, under a new baseline scenario for oil prices of USD 35 per barrel. Moreover, the Bank will continue to intervene in currency markets in order to smooth volatility and contain the impact on the external sector, while the future path of monetary policy will depend on the evolution of the current situation in the global economy.
The next meeting is scheduled for 27 April.