On the increase of the base rate of the National Bank of the Republic of Kazakhstan from 26.10.2022


On the increase of the base rate of the National Bank of the Republic of Kazakhstan from 26.10.2022 

Today, at the next meeting of the Monetary Policy Committee of the National Bank of Kazakhstan, it was decided to raise the base rate to the level of 16 percentage points. The rate for permanent access operations to provide liquidity has developed at the level of 17%, and for permanent access operations to withdraw liquidity – 15%.


In September 2022, annual inflation accelerated to 17.7% (16.1% in August 2022). Prices are rising for all its components:

  • Food products – 22.2% (+ 1.4% compared to last month);
  • Non–food products - 17% (+ 1.5% compared to last month);
  • Paid services – 12.3% (+ 2.2%, compared to last month).


The National Bank notes that "the rate increase is due to a combination of factors indicating growing inflationary pressure. The excess of inflation over forecasts according to September data has become quite significant. The key factors of the decision were high inflation expectations, steady demand, fiscal momentum, rising production costs due to the reorientation to more stable supply chains, the continued transfer of external inflation, including as a result of the continued strong exchange rate of the Russian ruble. Increased inflation expectations are putting pressure on prices and consumer behavior."

We largely agree that this is happening as a result of increased costs due to disruptions in supply chains, increased external inflationary pressure, high demand supported by fiscal stimulus and rising inflationary expectations of the population. The full-fledged effect on the country's economy from a significant increase in the base rate since the beginning of 2022 has not yet fully manifested itself.

Earlier we have already said that the National Bank should take more drastic measures to curb the increased inflation. Thanks to the rate increase, the real base rate (the difference between the base rate and annual inflation) is now at -1.7% (-3.2% in September 2022).

We fully support the decision to raise the base rate in response to a significant increase in inflation in the country. The last time the base rate reached its maximum of 17% in early 2016, then it was the response of the National Bank of Kazakhstan to the increase in inflation due to the transition to a free-floating exchange rate.

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