On June 5, 2025, the Monetary Policy Committee of the National Bank of the Republic of Kazakhstan decided to maintain the base rate at 16.5% per annum with a corridor of +/-1 percentage point. This decision was based on an assessment of actual economic indicators, updated macroeconomic forecasts, and the current balance of inflationary risks, DKnews.kz reports.
Inflation Remains Elevated in May
As of May 2025, annual inflation reached 11.3%. The primary driver of recent price growth continues to be service inflation, caused by a sharp increase in both regulated tariffs and market service prices. Food inflation has also accelerated, adding further pressure on household expenses.
In May alone, monthly inflation stood at 0.9%, notably higher than historical averages. Core inflation and seasonally adjusted inflation reached 10.1% and 11.4%, respectively, on an annualized basis. These figures reflect persistent price pressures amid rising consumer demand, growing production costs, and ongoing fiscal stimulus.
At the same time, inflation expectations among the population surged to 14.1% in May, up from 12.2% in April. This rise reflects continued volatility and uncertainty in the public’s view of future inflation dynamics.
External Inflationary Pressure Mounts
In addition to domestic factors, inflation in Kazakhstan is being influenced by growing external price pressures, including:
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Persistently high inflation in Russia;
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Rising global food prices amid strong international demand and currency volatility;
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Escalating global trade tensions;
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Volatility in commodity markets, particularly energy and raw materials.
Despite expectations of global monetary easing, central banks across major economies are maintaining cautious communication in response to sustained inflation and geopolitical uncertainty. Global price growth remains robust, while trade conflicts are amplifying inflation risks and dampening industrial and service sector activity.
Brent Oil Price Forecast Revised
As part of the baseline forecast, the National Bank has revised down the average price of Brent crude oil to $60 per barrel through the end of the forecast horizon. This adjustment is based on current market dynamics and the growing likelihood that global oil supply will outpace demand.
Inflation Forecasts Updated Through 2027
The National Bank has revised its inflation forecast for 2025 and 2026 upward. The updated forecast is as follows:
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2025: 10.5–12.5%
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2026: 9.5–11.5%
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2027: Inflation is projected to decline to 5.5–7.5%, as a result of tight monetary policy and the gradual rollback of fiscal support measures in the context of upcoming fiscal consolidation.
The upward revision for 2025–2026 is primarily attributed to rising food prices, heightened demand-side inflationary pressure, and weaker oil prices. Key risks to the forecast include:
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Strengthening domestic consumption;
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Accelerating external inflation;
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Unanchored inflation expectations among the population.
Policy Outlook: Tight Monetary Conditions to Persist
The National Bank’s moderately tight monetary policy and planned fiscal consolidation efforts are expected to have a continued disinflationary effect. However, uncertainty remains regarding several factors:
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Actual growth in fuel prices (gasoline, diesel);
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The strictness of fiscal discipline, including the execution of plans to reduce transfers from the National Fund;
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Potential secondary effects from rising regulated prices and VAT rate adjustments.
Growth Forecast Upgraded for 2025
Despite the inflationary environment, Kazakhstan’s economic outlook remains positive. The National Bank has raised its GDP growth forecast for 2025 to 5–6%, citing robust domestic demand and rising investment activity.
For 2026, the growth forecast stands at 4–5%, reflecting:
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Continued momentum from 2025;
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Slower export growth due to lower oil prices.
Economic expansion in 2026 will be supported by higher oil production and strong internal demand. Beyond that, long-term growth will depend on the successful implementation of structural reforms initiated by the Government, such as:
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Increasing investment in fixed capital;
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Attracting more foreign direct investment (FDI);
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Liberalizing key sectors of the economy.
High Inflation Requires Prolonged Tight Monetary Stance
The elevated inflation trajectory means the National Bank may need to maintain tight monetary conditions longer than previously anticipated. The balance of risks has shifted toward pro-inflationary factors, raising the likelihood that the base rate will remain at 16.5% until the end of 2025.
The current policy stance aims to:
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Stabilize inflation expectations;
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Prevent the consolidation of accelerating price growth;
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Return inflation to a sustainable downward path toward the medium-term target of 5%.
At the same time, the National Bank does not rule out a potential rate hike if inflation risks intensify further.
Improving Transparency in Monetary Policy
To enhance policy transparency and predictability, the National Bank will begin publishing summaries of its monetary policy deliberations, starting with the current forecast round. This measure aligns with international best practices and is intended to improve public understanding and trust in central bank decision-making.
Key Dates and Upcoming Announcements
More detailed information regarding the base rate decision and updated forecasts will be available in the Monetary Policy Report, to be published on the official website of the National Bank on June 11, 2025.
The next planned decision on the base rate will be announced on July 11, 2025 at 12:00 Astana time.
