Kazakhstan’s National Bank changes base rate

Kazakhstan Materials 25 October 2021 14:45 (UTC +04:00)
Kazakhstan’s National Bank changes base rate

BAKU, Azerbaijan, Oct. 25


The Monetary Policy Committee of the National Bank of Kazakhstan decided to set the base rate at 9.75 percent per annum with an interest rate corridor of +/– one percent, Trend reports with reference to the press service of the National Bank.

According to the bank, the rate on standing access operations to provide liquidity will amount to 10.75 percent, and on standing access operations to withdraw liquidity - 8.75 percent.

The National Bank said that the decision was made against the backdrop of continuing pro-inflationary pressure on economy, as a result of which inflation is formed above the forecast range of 7.5-8.5 percent in 2021, rising prices in world markets, accelerating inflation in trading partners and high inflationary expectations within the country.

"The external inflationary background remains unfavorable due to high prices for food in the world, disruptions in supply chains, rising costs of transportation, raw materials and energy, as well as a recovery in domestic demand," said the bank.

"The FAO Food Price Index in September 2021 increased by 32.8 percent as a result of higher prices for all subgroups of foodstuffs. Inflation in the countries of major trading partners remains at an elevated level. In China, the PPI (producer price index) rose to 10.7 percent as a result of higher prices for coal and energy-intensive products. Annual inflation in the EU in September of this year accelerated to 3.6 percent, in Russia - to 7.4 percent and continues to accelerate, as evidenced by weekly inflation in October, which amounted to 7.8 percent in annual terms," the National Bank reports.

Also, according to the bank, inflation will remain at an elevated level longer than previously expected before starting to decline. In this regard, inflation forecasts for 2021 have been adjusted upward.