The National Bank of Kazakhstan has raised its key interest rate to 16.5 percent to address rising inflation, which hit 9.4 percent in February. The bank anticipates that inflation will remain elevated in the coming years but expects a downward trend by 2027 due to several economic measures.
On March 7, 2023, the National Bank of Kazakhstan announced a significant increase in its key interest rate to 16.5 percent. This decision stems from a comprehensive analysis of current data, revised forecasts, and an assessment of inflation risks. The Monetary Policy Committee adopted this measure to mitigate inflationary pressures, particularly in light of high current inflation rates.
Recent data indicate a concerning rise in inflation metrics, with annual inflation rates climbing to 9.4 percent in February. This increase is driven by heightened service prices and an overall acceleration in price growth across various sectors. Monthly inflation in February was notably above historical averages, with core inflation rates reflecting considerable internal demand and increased consumer lending.
The National Bank anticipates that Brent crude prices will stabilize at approximately $70 per barrel through the forecast period, impacting inflation forecasts. Projections suggest inflation could reach 10-12 percent by 2025 and 9-11 percent by 2026. However, with anticipated measures, including the implementation of a restrictive monetary policy, inflation rates may stabilize between 5.5-7.5 percent by the end of 2027.
In summary, the National Bank of Kazakhstan has implemented a crucial interest rate hike to counter rising inflation, which has escalated to 9.4 percent. The bank expects further inflationary pressures due to various economic factors but is optimistic about decreasing inflation rates by 2027, contingent on restrictive policies and reduced fiscal stimulus. The next monetary policy decision will be communicated on April 11, 2025.
Original Source: en.trend.az
