National Bank of Kazakhstan cuts base rate to 16.25% as expected

ASTANA. Sept 4 (Interfax) - The National Bank of Kazakhstan has cut the base rate to 16.25% from 16.75%, with a corridor of plus/minus 1 percentage point, the regulator said. Analysts surveyed by Interfax had forecast a cut of 25-50 basis points. The most accurate forecasts came from Freedom Finance Global analyst Daniyar Orazbayev, who predicted 16.25%, and the Analytical Center of the Association of Financiers of Kazakhstan, which projected 16.25-16.50%.

The rate had been 18% from October 2025 until June 2026, when it was cut to 17%. It was lowered again on July 24 to 16.75%.

At its previous meeting, the regulator signaled it could cut the rate to around 16% if inflation slowed to 9-9.5%.

The National Bank noted that annual inflation eased to 9.8% in August, marking the 11th consecutive month of disinflation. Monthly inflation held at 0.6% in August, unchanged from July, while seasonally adjusted inflation rose to 0.9% from 0.7%. Core inflation remained steady at 0.7%.

Household inflation expectations for the year ahead fell to 12.1% in July from 13.4% in June, reflecting reduced concern over VAT increases, utility tariff hikes and food prices, though expectations of higher fuel prices grew. Professional market participants' expectations for year-end 2026 held at 10%, the regulator said.

External conditions remain volatile. The ongoing conflict in the Middle East keeps energy prices elevated and adds to external inflationary pressures, with major central banks maintaining hawkish rhetoric. Global food prices edged higher, driven by grains and vegetable oils, while meat prices fell for the first time in a long while.

In Russia, inflation remains persistent and pro-inflationary risks persist amid fuel market disruptions. Despite a key rate cut in July, the Bank of Russia's rhetoric has turned more hawkish, the National Bank noted.

In the EU, inflation has picked up somewhat, largely due to higher energy prices, with the European Central Bank holding rates steady at its last meeting. In the U.S., inflation has slowed but remains above target, with the Federal Reserve keeping rates unchanged.

The National Bank's next rate-setting meeting takes place on October 23.