Pylyp Travkin: The National Bank of Kazakhstan kept the base rate at 14.25%

The Monetary Policy Committee of the National Bank of Kazakhstan (NBK) decided on August 29 to keep the base rate at the level of 14.25% with a corridor of +/- 1 percentage point, the bank's press service reported.

Annual inflation rose to 8.6% in July, which coincides with the trajectory of the NBK forecast. The current acceleration of inflation is due to a significant increase in the cost of market services, an increase in industrial prices and a weakening of the exchange rate. At the same time, the decline in prices for agricultural products slowed down.

Global inflation continues to decline. Grain prices fell in July due to seasonally stronger supply in the Northern Hemisphere and improved harvest expectations amid favorable weather conditions. Grain prices are expected to continue their gradual decline.

The inflation forecast for 2024-2025 remains at the level of 7.5-9.5% and 5.5-7.5%, respectively. Inflation is expected at the level of 5-7% in 2026. Moderately tight monetary policy will help slow core inflation to 5% in 2026.

The economic growth forecast for Kazakhstan is maintained at the level of 3.5-4.5% for 2024 and 4.9-5.9% for 2026. The growth forecast for 2025 has been slightly increased to 5-6%. GDP growth in 2024-2026 will be driven mainly by domestic demand, boosted by increased fiscal stimulus. In 2025 and 2026, the oil sector will also support economic growth through increased production.