The Monetary Policy Committee of the National Bank of Kazakhstan decided to set the base rate at 16.75% per annum with an interest rate corridor of +/- 1.0 percentage points, El.kz reports.
Although global inflationary pressures are decreasing, some countries are still facing persistent inflation. So, the central banks of developed countries continue to tighten monetary conditions. Inflation is also slowing down in Kazakhstan, both in annual and monthly terms, the National Bank reported.
Annual inflation is within the forecast range and was 14.6% in June 2023. Monthly inflation continued to decline in May and slowed to 0.5% in June. So far, there are no indirect effects from the increase in fuel prices. However, a moderate slowdown in core inflation indicates the preservation of stable demand in the economy.
The current level of the base rate will slow down inflationary processes, partially mitigate the growth of government spending and prevent the consolidation of high inflation expectations. At the same time, the slowdown in inflation creates the possibility of a gradual reduction in the base rate.
As part of the next decision, based on the results of the forecast analysis, the National Bank will assess the feasibility of a gradual reduction in the base rate. The goal will be to maintain the base rate at a level conducive to achieving the inflation target of five percent in the medium term.
The next planned decision on the base rate will be announced on August 25, 2023 at 12:00 pm local time in Astana.
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