On Friday, April 12th, the National Bank of Kazakhstan is set to make another statement regarding its base rate.
In February, the Monetary Policy Committee of the National Bank of the Republic of Kazakhstan decided to reduce the base rate by 50 basis points to 14.75%. However, experts do not rule out the possibility of another rate cut this time.
According to a survey conducted by the Association of Financiers of Kazakhstan, 37% of experts see potential for further rate cuts to 14.5-14.25%, while the majority, 63%, expect the base rate to remain unchanged at the meeting on April 12.
Experts believe that there is ample room for reducing the base rate, as inflation has slowed down to 9.1%, resulting in a real rate of 5.65%. This indicates a significantly tight monetary policy. The trajectory for reducing the base rate by the end of the year is projected to be 12.5-13.0%.
Factors such as slowing annual inflation, a favorable external environment, and the need to stimulate the Kazakh economy due to emerging issues with budget revenue and a slowdown in lending are all pointing towards a base rate reduction.
Analyst Anna Bodrova, however, does not expect a rate cut to happen in April. She believes that the rate will likely remain at 14.75% due to limited room for monetary policy easing.
Bodrova explained that current annual inflation in Kazakhstan is around 9%, with the monthly consumer price index being relatively high in winter months but lower in February. This seasonal variation is expected to lead to a decline in inflation in the spring, allowing the National Bank to reconsider a rate cut.
