According to analysts, the impact of monetary factors on inflation has become particularly relevant following the COVID-19 pandemic, when extensive measures to support economies worldwide led to a rapid increase in prices. Research indicates that a direct correlation exists between the growth of the money supply and inflationary processes in many countries, including Kazakhstan.
Experts estimate that a 10% increase in the M3 money supply (a broad measure of the amount of money in the economy, including cash, deposits, and liquid assets) accelerates inflation by 0.8 percentage points over one year and by 1.0 percentage points over two years. In the long term, this effect is even more pronounced: a 10% increase in the money supply results in a price increase of 1.8%.
Data analysis from 2000 to 2023 revealed that Kazakhstan experienced three periods of excessive money supply growth, each accompanied by spikes in inflation. In the short term, external economic shocks, currency fluctuations, and changes in regulated tariffs also affect price levels; however, in the long run, the money supply remains the key factor.
Experts from the National Bank emphasize that considering monetary factors is crucial for monetary policy, and excessive expansion of the money supply can pose risks to macroeconomic stability.
Previously, "Kursiv" reported that annual inflation in Kazakhstan accelerated to 8.9% as of January.