The National Bank of Kazakhstan has raised its key interest rate to 16.5 percent, reacting to increasing inflation, which hit 9.4 percent in February. The inflation forecast has been adjusted, predicting rates of 10-12 percent in 2025 and a decline to 5.5-7.5 percent by 2027. The next rate decision will be announced on April 11, 2025.
On March 7, the National Bank of Kazakhstan announced the elevation of its key interest rate to 16.5 percent per annum, with a fluctuation corridor of +/- 1 percentage point. This decision by the Monetary Policy Committee was based on an in-depth analysis of current inflation data, forecasts, and risk assessments concerning inflation.
The bank recognized a significant increase in various inflation metrics, with the annual inflation rate rising to 9.4 percent in February. The increase in prices was driven primarily by service sector price hikes, which have notably accelerated. Monthly inflation figures for February exceeded historical averages, indicating robust internal demand coupled with fiscal stimulus and a surge in consumer lending, which stood at 33.5 percent year-on-year predicted by the end of 2024.
In addition to the domestic factors influencing inflation, the National Bank expects the price of Brent crude oil to average $70 per barrel throughout the forecast period. This expectation is rooted in both actual price trends and predictions of a supply surplus over demand within the oil market.
Due to new economic factors, the National Bank has revised its inflation projections upwards, anticipating a range of 10-12 percent in 2025 and 9-11 percent in 2026. By late 2027, inflation is expected to stabilize between 5.5-7.5 percent, attributed to the implementation of restrictive monetary policies and adjustments in fiscal stimulus through planned tax reforms.
The next announcement concerning the interest rate will occur on April 11, 2025.
The National Bank of Kazakhstan’s recent decision to raise the interest rate to 16.5 percent underscores its commitment to combat rising inflation, which has escalated to 9.4 percent annually. With projections suggesting continued inflationary pressures in the coming years, the bank aims to stabilize the economy through restrictive monetary measures. Upcoming evaluations will be crucial in addressing inflation dynamics effectively.
Original Source: en.trend.az
