BAKU, Azerbaijan, Sept. 13
The base rate has been increased in Kazakhstan, Trend reports citing the press service of the country's National Bank.
The bank's Monetary Policy Committee decided to set the base rate at 9.5 percent per annum with an interest rate corridor of +/– 1 percent. Accordingly, the rate on permanent access operations to provide liquidity and to withdraw liquidity will be 10.5 percent and 8.5 percent, respectively, the press service said.
The decision was conditioned by the prevailing pro-inflationary pressure in the economy caused by the global inflationary tendencies of rising prices for food and raw materials, with the outstripping recovery of global demand over output possibilities, the bank noted.
This pressure is amplified by internal off-season shocks, actively recovering consumer demand, as well as rising prices for electricity, gas and fuels and lubricants.
As a result, annual inflation accelerated to 8.7 percent. The inflationary background is also aggravated by the increased inflationary expectations of the population, which amounted to 8.8 percent in August 2021.
"Redundant outbreaks of COVID-19 have slowed down business activity in the world and exacerbated global supply problems, thus intensifying pro-inflationary processes. According to IMF forecasts, amid vaccinations and stimulus measures this year, the world economy will show a rapid recovery, followed by a slowdown in 2022,” the bank further said.
“Forecasts of international organizations for the growth of the economies of the trading partner countries of Kazakhstan has been improved in the EU and Russia, and slightly reduced in China. Global inflationary pressure continues to remain at a high level amid rising prices for food, raw materials, metals and cars," the bank added.
“The contribution to the inflationary trend is formed by the increased world food prices. This is evidenced by the growth in annual terms of the FAO Food Price Index in August 2021 by 32.9 percent, the bank also noted. “Against this backdrop, manufacturers around the world report persistent supply problems and high prices for logistics, raw materials and finished products. So, according to the Baltic Dry Index, the cost of shipping a container increased by 3.4 times compared to December 2019, and by 7.4 times - compared to May 2020.”
“Against this background, the overall inflation rate in the countries continues to grow, exceeding the targets of the monetary authorities. So, in the US, inflation in July 2021 reached its maximum value in 13 years - 5.4 percent, in the Eurozone - 3 percent in August 2021, which is the maximum value in 10 years, and in Russia - 6.7 percent in August 2021, the maximum value in 5 years,” the bank pointed out.
“Given the above, representatives of the largest global regulators declare the expediency of an earlier curtailment of the asset repurchase program, and developing countries have already embarked on a cycle of tightening monetary conditions. At the same time, the reduction in monetary stimulus from the US Federal Reserve and the ECB may lead to increased volatility in financial markets,” concluded the bank.