Kazakhstan's National Bank holds base rate, eyes H2 cut amid slowing inflation
The National Bank of Kazakhstan's Monetary Policy Committee decided to keep the base rate at 18.0 percent on March 6, 2026. Annual inflation slowed to 11.7 percent in February, but persistent pro-inflationary pressures prevent a rate cut at this stage.
Inflation slows, but pressures persist
The National Bank of Kazakhstan's Monetary Policy Committee decided to hold the base rate at 18.0 percent, following a comprehensive assessment of macroeconomic trends and risks.
Annual inflation continued its slowdown in February, reaching 11.7 percent from 12.2 percent in January.
This easing is supported by moderately tight monetary conditions, anti-inflationary measures, a slowdown in unsecured consumer lending, and liquidity absorption.
Moratoriums on utility tariffs and fuel prices, alongside favorable tenge exchange rate dynamics, also contribute.
However, pro-inflationary pressures remain, driven by elevated inflation expectations, potential second-round effects from tax changes, and external geopolitical tensions affecting oil prices and trading partners.
The Committee emphasized that there is currently no room for a rate cut, as the economy adjusts to tax changes, and core inflation and expectations remain key constraints.
Domestic resilience meets external uncertainties
The domestic economy remains resilient, with non-commodity sectors expanding, particularly construction, communications, and transport.
Domestic demand is normalizing, with retail trade growth moderating to 2.1 percent year-on-year in January 2026, indicating cooling after a prolonged active period.
Household lending, especially unsecured consumer loans, is slowing, with new loan growth falling by 7.2 percent year-on-year in January.
External inflationary pressure is moderate, but geopolitical uncertainty poses risks, prompting major central banks to maintain tight global monetary conditions.
Global food prices declined, while inflation in Russia accelerated.
The ECB and Federal Reserve recently held their policy rates unchanged, reflecting a cautious global stance.
Cautious stance, challenging path ahead
The National Bank of Kazakhstan's decision reflects a pragmatic approach to persistent inflation despite headline deceleration.
While acknowledging external risks and domestic adjustments, the central bank signals a potential easing later in the year, contingent on sustained disinflation.
This cautious forward guidance balances current inflationary concerns with future growth prospects, emphasizing a multi-instrument approach to price stability.