BAKU, Azerbaijan, May 6. The National Bank of Kazakhstan (NBK) initiated discussions regarding a possible adjustment of the inflation target with no decision taken yet, Trend reports via Renaissance Capital investment bank.
According to Renaissance Capital, the current target stands at 4-6 percent year-on-year, with plans to move to 3-4 percent in the medium term. However, the timing of the future target reduction has been repeatedly revised, and inflation has remained outside the target range for the past three years.
During a public discussion, the NBK mentioned that fundamentals could support an inflation target in the range of 5 to 7 percent.
However, Renaissance Capital experts believe that the NBK is more likely to choose the lower bound of this range, potentially moving from the range to a point target at 5 percent. This level has already been priced into the medium-term market forecast.
As Renaissance Capital noted, the mix of fiscal and monetary policies in Kazakhstan is growth-driven.
"However, recent communications from Kazakhstan's President Tokayev on the need to stabilize inflation and the government's measures to curb price growth for essential goods should support the NBK's disinflation efforts in 2023," said the bank.