The National Bank of Kazakhstan has decided to maintain the base rate at 18%. At first glance, it looks like a routine update for financial analysts. But in reality, this decision affects every household, every business, and every borrower in the country, DKNews.kz reports.
Governor Timur Suleimenov provided a detailed explanation of what lies behind the decision, what is happening with inflation and what risks may shape the economy in 2025–2026. Here is a clear, reader-friendly breakdown.
Why the Rate Remains at 18%
The key reason is straightforward: inflation is still too high and too unstable. Even though the headline numbers show a slowdown, price growth under the surface remains strong.
Suleimenov stated plainly:
“Inflationary pressure in the economy remains. To stabilize inflation expectations and reduce inflation, a prolonged period of moderate monetary tightness is required.”
In other words, people expect prices to keep rising. Businesses expect the same and adjust their prices accordingly. This creates a cycle that is difficult to break unless the regulator keeps monetary conditions tight.
He added:
“The National Bank does not see room for reducing the base rate until the end of the first half of 2026.”
And if inflation worsens, the Bank is ready to go further:
“In the absence of convincing signs of a sustainable downward trend in inflation, further tightening of monetary conditions is not ruled out.”
Why Inflation Looks Lower Than It Actually Is
In October, annual inflation slowed to 12.6%, but this was mainly due to administrative cuts in utility tariffs.
Core inflation, the real indicator of price dynamics, remains high. Suleimenov stressed:
“Core inflation has not declined significantly. Around 80% of goods and services in the consumer basket are rising at rates above the 5% target.”
The fastest-rising categories:
- food inflation - 13.5%,
- non-food inflation - 11%,
- fuel prices - nearly 15%,
- inflation expectations - 13.6%.
This means inflation is still persistent and requires tight policy to bring it down.
Economic Growth Is Strong - and That Fuels Inflation
GDP grew by 6.4% between January and October. Sectors such as trade, transport, construction and manufacturing show strong performance.
But economic growth in an environment of overheated demand contributes to inflation. Demand is rising faster than domestic production can keep up.
Suleimenov highlighted:
“The growth of retail trade significantly outpaces the dynamics of the manufacturing sector. This confirms that consumer demand is exceeding the economy’s productive capacity.”
Kazakhstan relies heavily on imports, and global price volatility quickly translates into domestic inflation.
Meanwhile, demand for loans remains high, pushing households toward microfinance organizations as banks tighten lending requirements.
Global Conditions Add Pressure
The global environment remains uncertain. Food prices worldwide are still elevated.
Suleimenov noted:
“Global food prices remain high. Prices for certain products - beef, vegetable oils - continue to rise.”
Central banks in the EU and US are cautious due to persistent inflationary risks. Russia’s inflation slowed to 7.7%, but risks remain.
Brent crude is expected to stay around 60 dollars per barrel.
Updated Inflation Forecasts
The National Bank raised its forecasts:
- 2025: 12–13%
- 2026: 9.5–12.5%
- 2027: 5.5–7.5%
Suleimenov explained:
“The widening of the forecast range for 2026 reflects increased uncertainty - the implementation of the tax reform, the influence of the quasi-budget sector and the rise in tariffs after the first quarter.”
Economic Growth Forecast
- 2025: 6–6.5%
- 2026: 3.5–4.5%
- 2027: 4–5%
Growth next year will be driven by strong investment, oil production and domestic demand. In 2026, fiscal consolidation will slow it down.
What Measures Will Contain Inflation
Suleimenov emphasized:
“Additional measures to ensure price stability, implemented jointly with the Government and the ARDFM, will play an important role.”
These include:
1. Tight monetary policy
Liquidity control, reserve requirement increases, mirrored gold operations.
2. Stricter consumer lending rules
“A countercyclical sectoral buffer, a debt-to-income ratio and tighter requirements for borrower indebtedness will be introduced.”
3. Predictable tariff growth
2026–2027: inflation + 5%
2028: inflation + 3%
4. Income growth above inflation
Formula: inflation + 2–3%
5. Conservative quasi-fiscal spending
“Quasi-fiscal stimulus must be implemented carefully.”
What This Means for Households
- loans will remain expensive,
- deposits will stay attractive,
- prices will continue to rise but more slowly,
- banks will tighten lending standards,
- tariff increases will be more predictable.
Suleimenov summarized:
“Inflationary pressure in the economy remains, and we are ready to take all necessary measures to fight inflation.”
Keeping the rate unchanged means the National Bank believes inflation is not yet under control. But coordinated actions by the Government, the National Bank and the regulator create the foundation for bringing inflation back to the 5% target.
Suleimenov concluded:
“Thanks to coordinated efforts, we will be able to achieve the established target.”
