The Atyrau bridge in Kazakhstan

Kazakhstan Monetary Policy October 2023

Kazakhstan: NBK cuts rates in October for second consecutive meeting

At its meeting on 6 October—the first presided over by Governor Timur Suleimenov—the National Bank of Kazakhstan (NBK) lowered its base rate to 16.00% from 16.50%, following the previous cut in August. The market had expected a cut but was uncertain about its size. Meanwhile, the interest rate corridor was maintained at plus or minus 1.0 percentage point.

The decision to decrease the base rate was driven by the recent deceleration of annual inflation and lower external price pressures. That said, the rate cut came despite an improving outlook for the economy and the recent uptick in inflation expectations. The Bank also noted that risks are tilted to the upside, given fiscal stimulus, the strength of domestic demand, the increase in inflation expectations and potential second-round effects stemming from increases in regulated prices.

In line with its previous statements, the NBK stated that several inflationary risks, both in the external sector and within the economy, constrain the possibilities for further rate cuts. That said, the Bank said further easing would be considered if annual inflation slows to a one-digit level. The Consensus is for interest rates to decrease marginally later in the year.

The next meeting is scheduled for 24 November.

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