Kazakhstan’s National Bank Raises Key Interest Rate to Address Inflation
The National Bank of Kazakhstan raised its key interest rate to 16.5 percent to combat rising inflation, which accelerated to 9.4 percent in February. The adjustment reflects concerns over increasing service prices and internal demand. Long-term projections indicate inflation may decline to 5.5-7.5 percent by 2027, influenced by fiscal reforms and monetary policy tightening.
On March 7, the National Bank of Kazakhstan announced an increase in the key interest rate to 16.5 percent. This decision was made by the Monetary Policy Committee to combat rising inflation, which has prompted urgent measures to avoid potential inflationary spirals. The new base rate features a corridor of plus or minus one percentage point, reflecting a careful analysis of economic data and forecasts.
Current inflation metrics indicate a worrying trend, with annual inflation climbing to 9.4 percent in February. The rise in service prices has particularly contributed to this increase, alongside a significant surge in monthly inflation. Core and seasonally adjusted inflation figures reached 14.2 percent and 16.9 percent, respectively, highlighting stronger internal demand and increased consumer lending activity.
Furthermore, the National Bank projects that the price of Brent crude oil will average $70 per barrel through the end of the forecast period. This estimation is grounded in current market trends and anticipated supply-demand dynamics within the oil sector.
The long-term inflation forecast has been adjusted as well, with expectations set at 10-12 percent for 2025 and 9-11 percent for 2026. By 2027, it is projected to ease to 5.5-7.5 percent, driven by a tighter monetary policy and reduced fiscal stimulus resulting from an impending tax reform. The next announcement regarding the interest rate will occur on April 11, 2025.
The National Bank of Kazakhstan has proactively adjusted its key interest rate to 16.5 percent in response to escalating inflation pressures. With significant annual inflation rates and market dynamics influencing this decision, the Bank aims to implement a restrictive monetary policy to stabilize the economy. Future inflation projections suggest a declining trend by 2027, contingent upon anticipated fiscal reforms and measures taken to curb rising prices.
Original Source: en.trend.az
