Key facts
- Kazakhstan's National Bank (NBK) cut its base rate by 100 basis points to 17%.
- The NBK aims to achieve single-digit inflation by 2026.
- The end-2026 inflation forecast was revised to 9-11%.
- GDP growth forecast for 2026 was upgraded to 4.5-5.5%.
- Household inflation expectations were 12.7% in May.
The National Bank of Kazakhstan (NBK) has reduced its base rate by 100 basis points to 17%. This move, while anticipated to some extent, was larger than many forecasts, which had leaned towards a 50 basis point cut. The NBK stated that its monetary policy stance remains 'moderately tight' due to a downward revision of its year-end inflation forecast for 2026 to 9-11%, with an aim to achieve single-digit inflation. Despite this, the bank acknowledged that inflationary tendencies persist, citing concerns over domestic demand, quasi-fiscal stimuli, tariff reforms, geopolitical tensions, and rising household inflation expectations, which stood at 12.7% in May. The NBK also noted that exchange rate dynamics absorbed inflationary pressures earlier in the year, and the tenge is not expected to appreciate strongly in the near term. The decision was influenced by decelerating food inflation, lower core inflation, and softer inflation in Russia, alongside a desire to support economic growth, which saw a slowdown in Q1. Consequently, the NBK upgraded its 2026 GDP growth forecast to 4.5-5.5%, supported by a higher Brent crude oil price forecast of $90 per barrel. For 2027-2028, GDP growth is projected at 3.5-4.5%.