National Bank of Kazakhstan cuts base rate to 15.75% from 16.25%

BAKU, Azerbaijan, October 23. The Monetary Policy Committee of the National Bank of Kazakhstan has decided to set the base rate at 15.75% per annum, down from 16.25%, with a corridor of +/- 1 percentage point, according to the NBK.

"Annual inflation continued its downward trajectory for the twelfth consecutive month, reaching 9.3% in September 2026, supported by moderately tight monetary policy and the favorable dynamics of the tenge exchange rate. Food inflation decelerated to 8.5% (down from 9.5%) driven by lower prices for fruits and vegetables and a slowdown in meat price growth. Non-food inflation declined to 11.0% (down from 11.4%) due to a slower annual price increase for fuel and lubricants. Meanwhile, services inflation remained unchanged at 8.9%, amid high price growth for unregulated services", the bank said.

Monthly inflation in September stood at 0.6% (matching August's 0.6%), while seasonally adjusted inflation was recorded at 0.7% (down from 0.9% in August). The median of seasonally adjusted core inflation estimates remained at 0.7%, indicating persistent price pressures.

One-year-ahead inflation expectations fell to 11.8% in September (down from 12.1% in August). Professional market participants revised their inflation forecasts downward to 9.5% for the end of 2026 (from 10.0%) and to 8.3% for 2027 (from 8.5%).

According to the bank, the external environment remains pro-inflationary. Tensions in the Middle East continue to support elevated global energy prices. The FAO Food Price Index rose to 136.0 points in September, an increase of 1.5% month-on-month and 5.8% year-on-year, driven primarily by higher prices for cereals, sugar, and vegetable oils due to adverse weather and logistical constraints. Global monetary conditions are tightening, with the ECB raising interest rates for the second time this year and the US Federal Reserve increasing rates for the first time since 2023, while the Bank of Russia paused rate cuts amid rising price pressures.

Kazakhstan's economic growth remains robust. Operational data indicates that in January–September 2026, GDP grew by 4.2%, led by non-resource sectors including construction, manufacturing, and transportation. Capital investments grew by 7.0%, while non-budgetary investments in the non-resource sector surged by 25.0%. Although consumer demand growth moderated alongside the normalization of consumer lending, fiscal and quasi-fiscal stimulus alongside strong investment activity continues to support domestic demand.

The NBK noted that the balance of risks remains tilted to the upside. Internal risks stem from fiscal expansion, elevated inflation expectations, fuel prices, and utility tariffs. External risks include high global energy and food prices, accelerating inflation among trading partners, and tighter global financial conditions. Moderating factors include tight monetary policy, a stable tenge exchange rate, liquidity management measures (including mirroring operations and higher reserve requirements), and consumer credit regulation.

According to the bank's statement, the ongoing deceleration in annual inflation and inflation expectations provided room for easing monetary policy. The current policy stance maintains the necessary degree of monetary tightness required to anchor disinflation and return inflation to its 5.0% target by 2028.

Looking ahead, the National Bank noted that a slight temporary acceleration in annual inflation remains possible toward the end of the year due to the low base effect from 2025 utility tariff moratoria. Given the current balance of risks, the likelihood of further rate adjustments before the end of 2026 remains low, and subsequent decisions will depend on sustained easing of underlying price pressures and the evolution of economic risks.