The Atyrau bridge in Kazakhstan

Kazakhstan Monetary Policy February 2024

Kazakhstan: NBK pauses its easing cycle in April

On 12 April, the National Bank of Kazakhstan (NBK) tapped the brakes on its monetary policy loosening cycle, keeping the policy rate unchanged at 14.75% and the interest rate corridor at plus or minus 1.0 percentage point. The pause surprised markets—another reduction had been anticipated—and was the first in six meetings, with the NBK having cut rates by 200 basis points cumulatively since August 2023.

Price pressures receded further in Q1, reaching an over two-year low in March on the back of the Bank’s restrictive monetary policy stance, a high base effect and cooling external price pressures. That said, March’s reading surprised the NKB on the upside as the disinflation pace slowed amid strong domestic demand as well as still-high inflation expectations. Against this backdrop, the NBK opted to hold its policy rate steady. The NBK noted that upside risks to the inflationary outlook remain, including stronger fiscal stimulus—in response to abnormal floods—and higher-than-expected oil prices.

In its communiqué, the NBK remained hawkish, expressing that “room for monetary policy easing is still limited” and reiterating its commitment to drive inflation towards the 5.0% target. That said, our panelists expect the easing cycle to resume later this year, and our Consensus is for about 200 basis points of new rate cuts by the end of the year.

The NBK’s next decision will be announced on 31 May.

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