Kazakhstan Cuts Base Rate to 16.75%: Will Loans Get Cheaper?

Money in Kazakhstan is set to become slightly cheaper. The National Bank has cut the base rate to 16.75% per annum, but borrowers should not expect lending rates to fall immediately, DKNews.kz reports.

The interest rate corridor remains at plus or minus one percentage point. This puts its lower limit at 15.75% and its upper limit at 17.75%.

“The decision takes into account the achieved decline in annual inflation and allows for a proportional adjustment in the degree of tightness of monetary conditions.”

Why did the National Bank cut the rate?

The main reason is slowing inflation. Kazakhstan’s annual inflation rate has declined for nine consecutive months, falling from 10.4% in May to 10.3% in June.

Food inflation eased from 10.7% to 10.4%. Non-food inflation remained unchanged at 11.7%.

Services inflation, however, accelerated from 8.7% to 9%. This was driven by higher prices for unregulated services, while regulated utility prices continued to decline in annual terms.

Inflation is falling, but pressure remains

Monthly inflation stood at 0.8% in June. The median seasonally adjusted estimate of core inflation reached 0.9%.

These figures suggest that price growth has not yet stabilised. According to the National Bank, the current dynamics may indicate that the disinflationary impulse is weakening and must be confirmed by subsequent data.

Public inflation expectations are also rising. In June, Kazakhstanis expected inflation over the next 12 months to reach 13.4%, up from 12.7% a month earlier.

Professional market participants kept their inflation forecast for 2026 at 10%. Their projection for 2027 was revised down to 7.8%.

The picture remains mixed: official inflation is gradually slowing, but households still expect prices to rise significantly.

Will loans become cheaper?

A lower base rate creates room for banks to gradually reduce the cost of financing. However, a cut of only 0.25 percentage points will not trigger a sharp decline in mortgage or consumer loan rates.

Banks consider more than the National Bank’s base rate. Deposit costs, borrower risk, inflation and regulatory requirements also determine the final price of a loan.

Businesses may feel the effect sooner than retail borrowers. This is particularly relevant for companies with floating-rate loans or those that regularly refinance working capital.

What will happen to deposit rates?

Returns on new deposits may also begin to decline gradually. Banks, however, are unlikely to rush into significant cuts.

Financial institutions still need household savings to fund their operations. At the same time, public inflation expectations remain elevated.

Even after the latest decision, the base rate is 6.45 percentage points above annual inflation. Monetary conditions in Kazakhstan therefore remain tight despite the modest step towards easing.

Will the tenge come under pressure?

A stronger exchange rate has helped slow inflation. A firm tenge reduces the cost of imported goods and limits price growth within Kazakhstan.

The currency’s future trajectory does not depend on the base rate alone. Oil prices, government spending, transfers from the National Fund and demand for foreign currency will also affect the exchange rate.

The National Bank is not prepared to cut rates too quickly. Aggressive monetary easing could make tenge-denominated assets less attractive and increase pressure on the currency.

Kazakhstan’s economy grew by 4.1%

Kazakhstan’s gross domestic product expanded by 4.1% in the first half of 2026. Excluding the mining sector, growth was approximately 5.3%.

Construction, manufacturing and transport continued to post strong results. Overall investment increased by 9.6%.

Investment in the non-resource sector, excluding budget funds, surged by 28.9%. While this is positive for economic growth, stronger domestic demand could create additional inflationary pressure.

Consumer activity remains moderate. It is being restrained by modest growth in real household incomes and a slowdown in consumer lending.

Will the base rate fall again?

There is no guarantee. Inflationary risks remain tilted to the upside.

The National Bank is monitoring fuel prices, housing and utility tariffs, and consumer activity. High and volatile inflation expectations are another major concern.

External pressure may also intensify. Renewed conflict in the Middle East has pushed energy prices higher, while vegetable oils and meat are becoming more expensive on global markets.

Inflation has also accelerated in Russia, one of Kazakhstan’s largest trading partners. In the euro area, the inflation outlook has deteriorated, prompting the European Central Bank to raise its key interest rates in June for the first time since 2023.

“The National Bank does not set a predetermined trajectory for the base rate and allows for both pauses and changes in the direction of its decisions, depending on whether actual inflation dynamics correspond to the forecast.”

The July decision therefore does not signal the start of an automatic cycle of rate cuts. If inflation accelerates again or fiscal spending exceeds approved parameters, the National Bank may pause or tighten monetary policy once more.

The next scheduled base rate decision will be announced on September 4, 2026, at 12:00 Astana time.