Kazakhstan National Bank maintains base rate at 16.5% amid inflation concernsThe National Bank of Kazakhstan has opted to maintain its base rate at 16.5%, with a +/-1 percentage point corridor, affirming its moderately tight monetary policy stance to tackle persistent inflationary pressures."Overall monetary conditions will remain moderately tight, essential to temper demand dynamics and consolidate the ongoing trend of inflation deceleration," the National Bank explained.The decision reflects current conditions deemed unsuitable for near-term rate cuts, supported by balanced inflation factors, ongoing price trends, persistent inflationary pressures, and heightened external uncertainties. "Future rate adjustments will hinge on evolving inflation prospects," the regulator added, underscoring its adaptable approach to monetary policy amid global and domestic economic shifts.March saw year-on-year inflation hit 10%, within the bank's projected 10-12% range, albeit with ongoing underlying pressures."Service sector inflation has emerged as the primary driver, fueled by larger-than-expected regulated tariff increases in Q1 and rising costs for market services. Food inflation has also significantly contributed to both monthly and annual price hikes," the statement noted.Monthly inflation moderated to 1.3% in March from February's 1.5%, driven by deceleration in non-food components and market services. Similar trends were observed in core inflation (0.9%) and seasonally adjusted inflation (1.0%), according to the central bank.Seasonally adjusted inflation for Q1 annualized at 14.2%, reflecting sustained price pressures from tariff reforms, fiscal stimulus measures, and resilient consumer demand.Externally, challenges persist with high global food prices and double-digit inflation in Russia, Kazakhstan's key trading partner, adding to inflationary risks. The bank also highlighted global market uncertainties from shifting trade policies and financial market volatility.Domestically, the economy showed robust 5.8% year-on-year growth in Q1 2025, driven by transportation (21%), construction (16.9%), manufacturing (8.7%), mining (6.1%), and trade (6.3%). However, early indicators suggest a cooling in consumer demand, with retail sales growth slowing to 5.1% in February from 19.3% in October 2024.The National Bank of Kazakhstan cautioned that inflationary pressures persist, driven by elevated inflation expectations, planned tariff increases, price liberalization measures, and anticipated tax reforms."External risks compound these challenges, notably potential double-digit inflation in Russia and global recession threats due to tightened U.S. trade policies and retaliatory measures. These factors have contributed to renewed market fragmentation, supply chain disruptions, and volatility across oil, equity, and commodity markets, potentially exacerbating inflationary pressures," the central bank highlighted.The bank is actively implementing measures to counterbalance risks, including foreign exchange transaction mechanisms, macroprudential policies on consumer lending, and adjustments to minimum reserve requirements. These actions are expected to reinforce the disinflationary impact of current monetary policy measures.Analysts from Finam and ACRA anticipated the rate would remain unchanged, aligning with the central bank's decision.In 2024, Kazakhstan's central bank reduced rates three times (February: -50bps to 14.75%; June/July: -25bps each to 14.25%), paused until December, then increased by 100bps to 15.25% and by a sharp 125bps in March 2025 to 16.5%, marking a robust policy tightening against inflationary pressures.The next rate decision by the National Bank is scheduled for June 5 at 12:00 Astana time. (ICE ALMATY)

Fonte notizia: INTERFAX