BAKU, Azerbaijan, June 7
Trend:
The Monetary Policy Committee of the National Bank of the Republic of Kazakhstan decided to set the base rate at 9.00 percent per annum with an interest rate corridor of +/- 1.0 percentage points.
Accordingly, the rate on constant access operations to provide liquidity will reach 10 percent, and on constant access operations to withdraw liquidity - 8 percent.
The decision was made taking into account the balance of inflation risks in the short and medium-term.
The persistence of external inflationary pressure, stipulated by an increase in the world food prices and the acceleration of inflation rate in the countries - the main trade partners of Kazakhstan, is being observed.
The process of the gradual recovery of business activity and consumer demand continues in the domestic economy.
The main risks of inflation in Kazakhstan in the medium term are associated with stronger fiscal stimulation of the economy, further growth in domestic prices for fuels and lubricants, higher food inflation rate as a result of higher prices in the world markets, and imbalance in the domestic food market, as well as the curtailment of incentives by central banks of developed countries.
As of May 2021, the annual inflation rate was 7.2 percent.
The rise in prices for non-food products and paid services was partially removed by disinflationary processes in the food market.
The food inflation rate continued to slow down and amounted to 9.3 percent in May 2021 (9.8 percent in April 2021).
Its current slowdown is associated with the withdrawal from the calculation of the high inflation base in 2020.
At the same time, the trend of price growth persists in certain commodity markets.
The growth in the world food prices that has continued for 12 months exerts additional pro-inflationary pressure.
The non-food component of the inflation rate in May 2021 accelerated to 6.7 percent (6.4 percent in April 2021) as a result of rising prices for fuels and lubricants, clothing, and footwear.
The rise in prices for fuels and lubricants is associated with an increase in producer prices, recovery in economic activity, and the delayed effect as a result of changes in the excise rate in 2020.
The annual growth in prices for paid services to the population as of May 2021 amounted to 5.1 percent (4.1 percent in April 2021). There is an increase in prices for utilities (electricity, garbage collection) and passenger transport services.
At the same time, there is an increase in prices for certain unregulated services from April through May 2021 amid the increased demand in terms of easing quarantine restrictions and mass vaccination of the population against COVID-19.
The inflationary expectations of the population have decreased as a result of a decrease in the uncertainty in respondents' answers amid the improvement in the economic situation and mass vaccination against COVID-19.
The quantitative estimate of inflation for the year ahead was 6.6 percent in May 2021 (7.2 percent in April 2021). The share of respondents expecting the current price growth to continue over the next 12 months increased to 42 percent (26 percent in April 2021).
The current level of the base rate allows maintaining control over the dynamics of inflationary processes and ensuring a gradual decrease in annual inflation in the medium term.
Monetary conditions, as the inflation rate slows down, will tend to a neutral level in the medium term.