- Decision
- Maintain
- Rate change
- 0 bps
- base rate
- 16.5%
The National Bank of Kazakhstan (NBK) left its base rate unchanged at 16.5 percent at the 29 August meeting, citing persistent inflationary pressures from robust domestic demand, volatile short-term expectations and rising global food prices amid trade and geopolitical uncertainties. After a 125 bp hike in March 2025, the rate has been on hold at 16.5 percent through the April, June, July and current decisions. The NBK reaffirmed a “moderate monetary tightening for an extended period” and will raise minimum reserve requirements from 2 September and introduce additional money-market and macroprudential tools, including a counter-cyclical capital buffer on household loans, to absorb liquidity and curb credit-fuelled demand. Annual inflation stalled at 11.8 percent in July—more than twice the 5 percent medium-term target—with food inflation up to 11.2 percent, non-food at 9.5 percent and services easing to 14.9 percent; monthly price growth of 0.7 percent remained above the 10-year July average of 0.4 percent. One-year household inflation expectations rose to 14.2 percent, while professionals see 2025 inflation at 11.3 percent. GDP expanded 6.3 percent y/y in January–July on strong investment (16.1 percent) and retail turnover growth (6.6 percent), yet supply continues to lag demand. Externally, the FAO food price index climbed to 130.1 in July and a firm ruble is adding to imported cost pressures, while Brent oil is assumed at USD 60/bbl in the baseline. The committee warned that absent a “significant” near-term disinflation, it is prepared to tighten further to steer inflation back toward the 5 percent goal.
Rate evolution
Over the period, the National Bank of Kazakhstan raised the base rate by 150 basis points from 16.5% to 18.0%, holding through mid-2025 before tightening in October 2025 and then leaving policy unchanged into April 2026. The early holds reflected persistent inflation and a risk balance that turned increasingly pro-inflationary, as tariff reforms, fuel liberalisation, strong consumer demand, retail lending and fiscal stimulus kept demand above supply, while volatile expectations and external pressures from global food prices, Russia, trade frictions and geopolitical tensions added to price growth. After inflation exceeded forecast and monetary conditions were judged to have loosened, the Bank raised the rate.
More recently, inflation slowed under moderately tight conditions, anti-inflation measures, the stronger tenge and a moratorium on utility and fuel price increases, and by June 2026 the Bank judged that moderate domestic demand and favourable external conditions partly offset accumulated pressures. With annual inflation easing to 10.4% in May from a 12.9% peak in September 2025 and the 2026 forecast revised down to 9.0% to 11.0%, the National Bank of Kazakhstan cut the base rate by 100 basis points to 17.0% on 5 June and by a further 25 basis points to 16.75% on 24 July as inflation edged down to 10.3% in June, while warning that underlying price pressures required confirmation. On 4 September, it lowered the rate by 50 basis points to 16.25% as annual inflation slowed for an eleventh month to 9.8% in August and one-year inflation expectations fell to 12.1% in July, but said scope for further cuts was limited after raising its 2027 inflation forecast to 6.5% to 8.5% and assessing that risks had shifted in a pro-inflationary direction amid stronger fiscal stimulus, unstable expectations, fuel and utility prices, and global food and energy costs.