National Bank of Kazakhstan raises base rate to 18% as expected
ASTANA. Oct 10 (Interfax) - The Monetary Policy Committee of the National Bank of Kazakhstan has decided to raise the base rate to 18% per annum with a corridor of plus or minus 1 percentage point, the National Bank said in a statement.
Analysts surveyed by Interfax had predicted that the bank would increase the rate to a minimum of 17%.
"Easing monetary conditions amid accelerating inflation, signs of demand exceeding supply expansion, and an active fiscal policy have required a significant response to stabilize inflation dynamics and prevent the risk of inflation spiraling," the National Bank explained.
The regulator said that annual and monthly inflation in September [12.9% and 1.1%, respectively] exceeded expectations across all sectors, including food, services, and non-food.
"Household inflation expectations over the next 12 months remain elevated and volatile, with uncertainty in estimates remaining. Professional market participants' inflation expectations for the current year have been raised from 11.3% to 12%," according to the press release.
External inflationary pressure also persists, and risks from global food markets are increasing. Analysts have been recording record price increases in meat and vegetable oil categories in recent years.
The National Bank also notes accelerated economic growth of 6.5% year-on-year in January-August 2025 compared to 3.7% for the same period in 2024, noting that growth is concentrated in sectors dependent on fiscal expansion and domestic consumption.
"Inflationary risks are primarily driven by internal factors and mostly by persistently high domestic demand, the secondary effects associated with implementing tariff reforms and liberalizing the fuel and lubricants market, as well as the inflationary impact of tax reform, including VAT," the central bank said.
"The committee has decided to hike the base rate under these conditions in order to tighten monetary policy owing to inflation exceeding forecasts," the regulator clarified.
The National Bank believes that the decision should stabilize inflation dynamics and expectations, supporting the value of tenge assets.
"The National Bank will continue to assess the balance of pro- and disinflationary factors closely, as well as the dynamics and trajectory of decelerating inflation. The feasibility of further tightening will be considered if the current level of tightness proves insufficient to stabilize inflation," the National Bank said.
The next scheduled decision of the Monetary Policy Committee on the base rate will be announced on November 28.
After raising the base rate by 1 ppt to 15.25% pa in November 2024, the National Bank maintained it at this level for over three months. In early March this year, the central bank unexpectedly hiked the rate by 1.25 ppts to 16.5% pa. The bank explained the decision by citing the current rate of price growth reaching high levels, which required active response measures. The National Bank retained the rate at 16.5% pa at several subsequent meetings.
