Kazakhstan's central bank has announced a reduction in its base rate to 15.75%, a move that aligns with market expectations and comes as a response to a dynamic downturn in annual inflation. This strategic adjustment also reflects the stabilization of volatile inflation expectations around historical norms.
The National Bank of Kazakhstan (NBK) indicated that October's monthly inflation remained steady at 0.7%, suggesting that domestic fiscal stimuli and robust consumer demand, which tend to push prices higher, are being offset by declining global food costs and strict foreign monetary policies. The decision to lower the rate from 16% on October 6 follows a period of stable inflation attributed to these factors.
The NBK has emphasized that future base rate decisions will be made in accordance with the predicted trajectory of inflation, maintaining tight monetary policies to achieve their future target of 5% inflation. The central bank remains committed to moderate monetary tightening and is open to further rate reductions if the downward trend in annual inflation continues into 2024 towards single-digit targets. Nevertheless, it also cautions that intermittent pauses may occur for detailed risk analysis.
In addition to domestic financial strategies, the central bank is monitoring global economic conditions, including grain price projections which suggest near-term decreases due to increased seasonal supplies. However, an expected early next year uptick is anticipated due to reduced Ukrainian grain exports before prices taper off mid-2024 as supply chains improve efficiency.
The NBK's actions take place against a backdrop of challenging external monetary conditions worldwide. Notably, the US Federal Reserve has delayed easing measures while the European Central Bank (ECB) maintains high rates amidst persistent above-target inflations across various trading partner nations.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.