The National Bank of Kazakhstan raised its key interest rate to 16.5 percent to address rising inflation, which hit 9.4 percent in February. The decision aims to manage inflation risks amid current economic pressures. Future forecasts suggest inflation will remain elevated in coming years, with expectations of gradual improvement by 2027.
On March 7, 2025, the National Bank of Kazakhstan increased its key interest rate to 16.5 percent. This decision, as reported by Trend via Kazakhstan’s National Bank, was made by the Monetary Policy Committee and includes a corridor of +/- 1 percentage point. The adjustment reflects an analysis of current economic data, updated forecasts, and the assessment of inflation risks.
The National Bank emphasized that softened monetary and credit conditions have allowed current inflation rates to reach troubling heights, necessitating decisive actions to mitigate the risk of inflation spiraling out of control. Annual inflation surged to 9.4 percent in February, driven by notable price rises across various sectors, particularly in services. Monthly core inflation reached 14.2 percent and seasonally adjusted inflation hit 16.9 percent, indicating strong internal demand and ongoing consumer lending pressure.
Future forecasts suggest that the price of Brent crude oil will average $70 per barrel through the forecast period, based on current market dynamics. The National Bank has increased its inflation projection for the upcoming years, estimating inflation at 10-12 percent in 2025 and 9-11 percent in 2026, with expectations of declining to 5.5-7.5 percent by the end of 2027 due to tight monetary policy and reduced fiscal stimulus resulting from planned tax reforms. The next announcement regarding interest rates will occur on April 11, 2025.
In summary, the National Bank of Kazakhstan has taken significant actions to confront rising inflation by raising the key interest rate to 16.5 percent. This move is part of a broader strategy to manage inflation risks as current economic conditions show increasing inflation metrics. The forecasts indicate ongoing inflation challenges in the near future, with expectations of gradual decline by 2027, contingent on effective monetary policy and planned reforms.
Original Source: en.trend.az
