The Atyrau bridge in Kazakhstan

Kazakhstan Monetary Policy April 2023

Kazakhstan: Central Bank stays put for a second time in April

At its meeting on 7 April, the National Bank of Kazakhstan (NBK) kept its base rate unchanged at 16.75%, mirroring its decisions in January and February. Meanwhile, the interest rate corridor was kept at plus or minus 1.0 percentage points.

The NBK deemed that inflation dynamics were meeting its forecasts, including a gradual deceleration in the growth of annual and monthly consumer prices. Inflation decreased to 18.1% in March from 21.3% in February, and consumer prices grew 0.9% month on month in March (February: 1.3%)—the lowest rate in 13 months.

That said, the Bank also noted that inflationary pressures remained resilient, notably domestic factors, such as increased public spending and a rise in prices for previously regulated goods and services. Moreover, inflation expectations for the year ahead rose from 14.2% in February to 16.5% in March, amid growth in salaries and food prices, as well as changes in the FX rate. All these factors underpinned the NBK’s decision to maintain the policy rate at the current level, instead of cutting it.

The NBK struck a dovish tone in its communiqué; it underlined that maintaining the current rate through H1 2023 was necessary “in order to reduce inflation in the medium term” and to “prevent the anchoring of inflationary expectations at high levels”.

Looking ahead, our panel forecasts the NBK to reduce the base rate by the end of 2023 as inflationary pressures lessen.

The next monetary policy meeting is scheduled to take place on 26 May.

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