BAKU, Azerbaijan, Nov. 18
By Maryana Akhmedova – Trend:
Kazakhstan may need to further tighten monetary policy to contain inflation, Trend reports via the economic outlook of International Monetary Fund (IMF).
Overall inflation and inflationary expectations far exceeded the target for most of 2020 and 2021 due to rising world food prices, delayed domestic demand, and imported inflation, the report said.
According to the IMF, a gradual increase in the base rate in recent months has been appropriate and further increases may be needed to capture inflationary expectations.
“Given existing weaknesses in monetary transmission, recent efforts to better coordinate monetary and fiscal policy implementation, as well as government initiatives to mitigate the impact of domestic supply chain disruptions, should also help curb inflation,” the IMF noted.
During the COVID-19 pandemic, Kazakhstan’s flexible exchange rate played a positive role. Recent improvements in monetary policy have been made in the area of transparency of policy measures through the publication of NFRC foreign exchange transactions and increased communication.
“In line with the NBK’s 2030 strategy, strengthening monetary policy effectiveness will require efforts to further develop domestic capital markets, reduce dollarization, coordinate with fiscal policy, manage excess bank liquidity, and eliminate non-core mandates and quasi-fiscal activities of the NBK,” the IMF concluded.
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