Kazakh National Bank lowers base rate to 15%
ASTANA. May 5 (Interfax) - The National Bank of Kazakhstan has decided to lower the base rate to 15% from 17% with a with a symmetric interest rate corridor of +/- 1 percentage point, the bank said in a statement.
Since the latest decision on the basic rate made on March 14, 2016 the balance of risks between price stability and financial stability has improved, "which reduces the feasibility of maintaining high interest rates." Signs of falling inflation expectations emerged, the tendency towards restoring confidence in the tenge-denominated assets in the financial market is underway, as well as market rates hedging currency risks declined, the National Bank said.
It was reported earlier that on February 2 this year, the National Bank of Kazakhstan set the base rate at 17% and held this rate on March 14.
In April 2016 the annualized inflation rate (compared to April 2015) rose to 16.3%. Annualised inflation still remains high, but the three last months of 2015 (October to December) mainly caused its increase - a total of 10.4% - when forex rate changes affected domestic prices most significantly. It is estimated that currently the transfer effect is almost exhausted with regard to the goods traded, but inertial processes adjusting regulated tariffs and prices of non-tradable goods are still underway, according to the National Bank.
In the previous three months, the monthly inflation rate was adjusted within the boundaries corresponding to the target band of 6-8% of annualized inflation, according to the central bank. According to a survey conducted in April 2016 by the National Bank inflation expectations among the general population declined. The share of respondents who expect price increases in the next 12 months went down to 40.5% in April from 61.6% in January 2016.
Decisions on the base rate later in 2016 will be made by the National Bank on June 6, July 11, August 15, October 3, November 14.
