BAKU, Azerbaijan, July 26
Trend:
The Monetary Policy Committee of the National Bank of Kazakhstan (NBK) decided to set the base rate at 9.25 percent per annum with an interest rate corridor of +/– 1 percentage point, Trend reports citing the NBK.
Accordingly, the rate on continuous access operations to provide liquidity will be 10.25percent, and on continuous access operations to withdraw liquidity - 8.25percent, Trend reports with reference to the National Bank.
“Weighted tightening of monetary policy is caused by the need to anticipate the risks of unwinding an inflationary spiral and return inflation to the target corridor of 4-6 percent in 2022. At the same time, the influence of the unstable epidemiological situation in the world and, in particular, in Kazakhstan, on the restoration of business activity was taken into account. The rate increase will support the attractiveness of tenge assets, which will increase the efficiency of pricing in the foreign exchange and money markets in order to form expectations that exclude unwanted equilibria,” the message said.
“The decision was driven by realized inflation risks from the supply side and sustained inflationary pressure in the economy from the demand side. Inflation is forming above forecasts, while expectations for further price increases remain high and unsecured. The rapid recovery of economic growth and dynamics of consumer activity with a significant fiscal impulse forms a pro-inflationary trend,” the bank said.
“At the same time, such significant factors as the rise in prices for certain groups of food products against the background of the general global trend of rising food prices, disruptions in supply chains, rising producer prices with increasing prices for raw materials and supplies, as well as the continuing potential for growth in regulated prices are focused on the supply side. International experience shows that the impact of the transmission mechanism of monetary policy on supply shocks is limited, and inflation adjustment to these changes is inevitable. Based on this practice, the NBK, by its decision, is more responsive to risks from the demand side associated with increased inflationary expectations,” the NBK said.
The next planned decision of the NBK Monetary Policy Committee at the base rate will be announced at 15:00 on September 13, 2021 Nur-Sultan time.