Monday, September 3, 2018

Kazakhstan holds rate, sees inflation staying near 6%

     Kazakhstan's central bank left its base rate at 9.0 percent, saying inflation is declining slower than expected and is likely to remain near the upper range of its forecast of 4.0 to 6.0 percent in 2019 but may then fall below the lower range by end of 2020.
      In a televised press conference, Daniyar Akishev, chairman of the National Bank of Kazakhstan (NBK), said a recovery of domestic demand along with external factors accounted for the current pressures on inflation.
      Kazakhstan's inflation rate rose slightly to 6.0 percent in July from 5.9 percent in June, within the NBK's target range of 5.0 to 7.0 percent.
      Akishev said inflation expectations are in a long-term decline despite monthly variations and survey results from July show expectations of inflation in 12 months of 5.6 percent.
       Economic activity in Kazakhstan is also continuing to improve, with short-term data indicating economic growth of 4.9 percent in the January to July period, supported by growth in mining and processing, industry, transport, communications and trade.
      Investments in fixed assets, especially in the oil and gas industry, rose by 23.7 percent in the first seven months of this year and expectations for further growth remain at a high level, Akishev said, adding that consumer demand is also continuing to growth due to higher wages and state spending.
      However, he also did not exclude a slowdown in 2019 due to the high base this year.
      In the first half of this year, Kazakhstan's Gross Domestic Product grew by an annual rate of 4.1 percent.
      Looking abroad, Akishev said the balance of risks had shifted to the negative side and while oil prices remain at relatively high levels, this cannot compensate for the uncertainty stemming from the relationship between the largest economies in the world.
       Global food prices fell 3,.7 percent in July but Akishev said this decline should be short-living as global consumption remains on a stable long-term rising trend.
       U.S. policy of boosting economic growth along with the Federal Reserve's interest rate increases is leading to a flow of capital away from developing countries, weakening their currencies and putting inflationary pressures on emerging markets, he added.
       Kazakhstan't tenge has depreciated steadily this year and was trading at 365.8 to the U.S. dollar today, down 9 percent this year.


Post a Comment