The Atyrau bridge in Kazakhstan

Kazakhstan Monetary Policy November 2023

Kazakhstan: NBK cuts rates in November for third consecutive meeting

At its meeting on 24 November, the National Bank of Kazakhstan (NBK) lowered its base rate to 15.75% from 16.00%. This followed previous cuts in October and August. The market had expected a more aggressive 50 basis point cut. Meanwhile, the Bank maintained the interest rate corridor at plus or minus 1.0 percentage points.

The Bank lowered the base rate because annual inflation has decelerated and external price pressures have eased. The reduction in inflation has largely been driven by past rate hikes and a high base effect, while lower external inflation has largely been driven by declining global food prices. That said, the Bank noted that risks to the inflation outlook were skewed to the upside, considering recent fiscal stimulus, strong domestic demand, rising inflation expectations, potential second-round effects from regulated price increases and possible increases in food prices due to a poor harvest this year.

As in earlier meetings, the NBK was cautious in its forward guidance. The Bank said it could continue to gradually reduce the base rate next year if inflation fell, balancing the need to support the economy with bringing inflation back to its 5% target in the medium run.

The Consensus is for the Bank to continue to lower interest rates next year. The next meeting is slated for 19 January.

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