The National Bank of Kazakhstan increased the base rate to 16.5% due to economic uncertainties, with analyst Rassul Rysmambetov identifying key factors such as U.S. policy changes and proposed VAT hikes as influences on inflation expectations.
The National Bank of Kazakhstan has recently increased the base rate from 15.25% to 16.5%, marking a significant move in response to rising economic uncertainties. Analyst Rassul Rysmambetov described this adjustment as a preemptive measure, aimed at combating potential inflation driven by increasing tariffs, a proposed VAT hike, and the broader trend of economic deregulation, as reported by Kazinform on March 7.
Rysmambetov identified three critical factors influencing this decision. Firstly, he noted the ramifications of policy shifts in the United States during Donald Trump’s administration, particularly in relation to energy policies that may affect Kazakhstan’s budget and inflation forecasts. Secondly, President Kassym-Jomart Tokayev’s May decree on economic liberalization signifies a move towards deregulating prices and tariffs. Lastly, the government’s intention to raise VAT has heightened inflationary expectations.
Rysmambetov commented on the volatility of the current economic landscape. He stated, “If there had not been such an active attack on oil and inflation expectations related to VAT, the situation could have been much more stable.” He emphasized the unpredictable nature of global events impacting local economies.
Additionally, he remarked on the ongoing tariff conflicts between major economies, asserting, “The tariff war between the US, Europe, Canada, Mexico, and China is a global change that we feel as part of the global economy.” Rysmambetov believes that as an oil-dependent nation, Kazakhstan is particularly vulnerable to the outcome of these international tensions and stressed the need for strategic reevaluation of existing plans.
The National Bank of Kazakhstan’s decision to raise the base rate is a strategic response to economic instability driven by various local and global factors. Analyst Rassul Rysmambetov articulates that this action addresses inflation concerns spurred by tariffs and proposed tax hikes. As Kazakhstan navigates these challenges, the implications of international policies remain critical for its economic future.
Original Source: astanatimes.com
