National Bank of Kazakhstan hikes the base rate to 15.25% pa  The National Bank of Kazakhstan raised the base rate by 100 basis points, instead of keeping it at 14.25% as expected. At present the base rate is 15.25% per annum with a corridor of +/- 1 percentage point.MARKET UNDER PRESSUREWhat was the reason for this unexpected decision? The National Bank explained that it was due to inflation, which came up to 8.5% in October because of several factors: growth in prices of non-food products, increase in tariffs under the "Tariff for Investments" program and a weakening of the tenge.The National Bank does not rule out a further growth of the base rate in the event of rising inflation.It is worth noting that the National Bank of Kazakhstan's decision to raise the base rate to 15.25% did not coincide with the forecast of the majority of analysts polled by the Interfax-Kazakhstan agency, who predicted that the key rate would remain at 14.25%.STRUGGLE FOR STABILITYAccording to Olga Belenkaya, head of macroeconomic analysis at Finam investment company, the decision to raise the base rate can be seen as an attempt to stabilize the currency market and curb the tenge's weakening.The regulator may be considering a tightening of monetary policy as an alternative to the currency interventions that were already carried out in November to smooth out the tenge exchange rate, she believes.According to the head of the National Bank, Timur Suleimenov, the regulator responded to the weakening tenge with currency interventions, selling $1 billion of gold and foreign exchange reserves since 16 November."According to the head of the National Bank today, the central bank does not plan to intervene until the end of this year, unless there are drastic changes in the currency market. Perhaps the regulator sees the increase in the key interest rate as a substitute for the need for currency intervention. National Bank recently announced the return of the requirement for exporters to sell 50% of their foreign exchange earnings, which can also be seen as a tool to support the tenge exchange rate," Belenkaya says.THE NATIONAL BANK COMPLETES EASING CYCLERamazan Dosov, chief analyst at the Association of Financiers of Kazakhstan, believes that the base rate hike is also a signal that the regulator is ready to tighten policy further to bring inflation back to the 5% target."In other words, we are seeing a reversal in the direction of monetary conditions after less than a year and a half of easing, which began in August 2023, when the rate was 16.75%. It is possible that there will be no need to raise the rate further if the currency market stabilizes and the country's inflationary processes return to the levels of spring-summer 2024," he believes.What will the regulator do next? Everything depends on the market situation and the ability of inflationary processes to return to the levels of spring-summer 2024. (ICE ALMATY)

Fonte notizia: Interfax