Monetary Policy of Kazakhstan July 2022

At its last meeting on July 25, the National Bank of Kazakhstan (NBK) decided to raise its base rate by 50 basis points to 14.50%, following its decision to leave it unchanged in early June. At the same time, the interest rate corridor was kept at the level of plus or minus 1.0 percentage points.

This decision was caused by exceeding the target inflation rate, as well as the acceleration of inflation expectations. Inflation remained in double digits in May and June, with median inflation expectation for the coming year rising to 14.9% in June from 13.8% in May. Supply chain disruptions, currency depreciation and external inflationary pressures have driven prices up in recent months. Inflation was further spurred by strong domestic demand associated with an increase in government spending at the end of the second quarter.

Looking ahead, our commission expects to tighten another 25 basis points by the end of the year. The bank said that inflation has not yet peaked and is forecast to continue rising until the first quarter of 2023. The bank said that future monetary policy decisions will depend on its economic outlook as well as the balance of risks in the global and domestic economies. The next monetary policy meeting is scheduled for September 5.

FocusEconomics Consensus experts believe that the base rate at the end of 2022 will be 14.75%, and by 2023 – 11.35%.