National Bank of Kazakhstan holds base rate at 16.75%, as expected

ASTANA. July 5 (Interfax) - The National Bank of Kazakhstan's Monetary Policy Committee has decided to keep the base rate at 16.75% per annum with an interest rate band of ±1 p.p., the regulator said on Wednesday.

Most analysts polled by Interfax agreed that the base rate would remain at the current level.

"Global inflationary pressures are easing, but inflation is still rising in a number of countries. Against this background, the central banks of developed countries continue to tighten monetary policy. In Kazakhstan, inflation has been slowing down both in annual and monthly terms," the regulator said.

The National Bank said inflation expectations were still high, as domestic prices remain exposed to the pressure of increased fiscal stimulus.

"This requires a prudent approach to monetary policy. The current base rate will help slow inflationary processes, partially offset rising government spending, and prevent high inflation expectations from being firmly anchored," the regulator said.

Inflation expectations for June next year remain high at 17.2%, compared with 17% in May, in response to climbing prices for fuel and utilities.

The National Bank noted that an inflation slowdown lays grounds for lowering the base rate.

"As part of the next decision, the National Bank will assess the feasibility of a prudent base rate reduction. The decision of the National Bank will be aimed at maintaining the base rate at a level that is optimal to achieve the 5% inflation target in the medium term," the regulator said.

The next decision on the base rate is due on August 25.