Kazakhstan Interest Rate

Central Bank unexpectedly cuts rates in June

Rates remain high: At its meeting on 5 June, the National Bank of Kazakhstan (NBK) unexpectedly reduced its base rate by 100 basis points to 17.00%, marking the first cut since July 2024. That said, rates remain high by historical standards.

Easing inflation drives the cut: The decision came against a backdrop of easing inflation and an improved inflation outlook for the coming years, supported by the weaker-than-expected impact of VAT changes on consumer prices, as well as currency appreciation. The Bank projects inflation to continue moderating, gradually moving toward its 5.0% target by the end of the decade.

Panelist insight: Dmitry Dolgin, Chief Economist of the CIS region at ING, commented on the outlook: “For the next meeting, a hold is the most likely scenario in our view, unless the tenge continues to appreciate and CPI falls below 10% YoY in the near term. There are several reasons for caution. First, the pickup in global inflationary pressures has already started to feed into higher PPI in Kazakhstan […]. Second, tenge dynamics remain volatile. […] Third, domestic pro-inflationary risks remain in place, especially those linked to quasi-fiscal stimulus and the eventual unfreezing of utility tariffs, as reiterated by the NBK. Finally, the current NBK guidance is explicitly more data-driven than last month’s wording”.

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