Monday, January 25, 2021

Kazakhstan maintains rate as inflation pressures rise

      Kazakhstan's central bank kept its key policy rate steady, saying this decision was made to ensure that inflation returns to its target corridor as inflationary pressures, both internal and external, begin to rise.
      The National Bank of the Republic of Kazakhstan (NBK) left its base rate at 9.0 percent, unchanged since July 2020 when it lowered the rate for the second time last year after a first cut in April.
      Although NBK cut its base rate by a total of 300 basis points in April and July, the net change for last year only amounted to 25 basis points as the rate was raised by 275 basis points in March in an emergency policy moves to protect the exchange rate of the tenge, which came under pressure from a collapse in the prices of oil, the country's main export.
      Inflation in Kazakhstan rose to a 2020-high of 7.5 percent in December, up from 7.3 percent in November, with food prices rising 11.3 percent, driven by higher global and domestic prices.
     "Core inflation indicators indicate the acceleration of inflationary pressures," the central bank said, noting core inflation rose to 7.16 percent in December and inflation expectations remain elevated.
     In December NBK said its medium-term inflation forecasts had not changed significantly and inflation is expected to gradually slow toward the upper limit of its target band of 4.0 to 6.0 percent by the end of 2021.
     NBK said Kazakhstan's economy contracted by 2.6 percent in 2020, in line with its forecast, mainly due to lower output from mining, trade and transport.
     The central bank's own survey of businesses show improved sentiment and the business climate index rose to 4.2 percent in December from minus 1.3 percent in November.



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