The Monetary Policy Committee of the National Bank has decided to maintain the base rate at 15.25% per annum with a corridor of +/- 1 percentage point, reports the correspondent of the business information center Kapital.kz, citing the press service of the NBRK.
In December, inflation in Kazakhstan rose to 8.6%, remaining within the forecast range of 8-9% for 2024.
The primary contribution to this dynamic comes from the significant increase in service prices and the acceleration of inflation for non-food products observed since August. Inflation is rising against the backdrop of the implementation of the "Tariff for Investment" program and the weakening of the tenge. Additionally, the growth of the persistent component of inflation continues, indicating demand pressure due to ongoing fiscal stimulation. Public inflation expectations in December increased again, demonstrating high volatility.
Current inflationary pressure remains elevated amid high global food prices and accelerating inflation in Russia. In developed economies, inflation has increased slightly in recent months after a prolonged decline. Persistent inflation and a strong labor market are likely to influence the maintenance of tight external monetary conditions for a longer period. Thus, the US Federal Reserve anticipates a slower reduction of rates compared to September estimates.
The growth of the short-term economic indicator by the end of 2024 accelerated to 6.2% y/y , which may indicate signs of overheating in the economy. Production growth is observed across all major sectors. The highest growth was recorded in the agriculture, construction, trade, and transportation sectors. There is also an acceleration in the dynamics of the manufacturing industry.
Domestic demand exceeds supply capabilities and remains consistently high amid active fiscal stimulation, rising monetary incomes, and expanded investments in the non-resource sector. This is confirmed by the growth in retail trade and consumer lending. The business activity indicator monitored by the National Bank has been in positive territory for 11 consecutive months.
Pro-inflation risks persist. They are driven by higher inflation in Russia from the external environment, and from the internal environment by the continuation of reforms in regulated prices, the pass-through effect of the tenge's depreciation on prices, high domestic demand amid fiscal stimulation, unanchored inflation expectations, and the growth of consumer lending.
“Overall monetary conditions have somewhat eased against the backdrop of currency depreciation, rising inflation expectations, and the actual inflation dynamics. In this regard, during the next decision, which will update the forecasts for key macroeconomic indicators, the committee will assess the need for additional tightening of monetary policy to return inflation to a trajectory of sustainable decline towards the target of 5%,” the National Bank's statement indicates.
The next scheduled decision on the base rate will be announced on March 7, 2025, at 12:00 Astana time.