National Bank of Kazakhstan holds key rate at 18% (Part2)The National Bank of Kazakhstan’s monetary policy committee on Friday left its benchmark interest rate unchanged at 18%, a move widely anticipated by analysts.The decision maintains the rate corridor at plus or minus 1 percentage point."The dynamics of inflationary processes and the balance of risks correspond to the forecasts and estimates of the National Bank," the central bank said in a statement.It cited external challenges and uncertainty over the scale of impact from tax system changes, as well as the potential for renewed growth in utility tariffs and fuel prices starting in the second quarter, as reasons for a "balanced and cautious approach.""Thus, the base rate will most likely be maintained at the current level until the end of the first half of 2026," the statement concluded.FOOD PRICES FUEL INFLATIONInflation for 2025 finished at 12.3%, in line with the bank's forecast. The food component, at 13.5%, remains the largest contributor. Rising prices for meat and butter continue to push inflation higher in Kazakhstan, the National Bank said, citing increased production costs and high export volumes.Non-food inflation moderated slightly to 11.1%, aided by a stronger exchange rate, while growth in prices for paid services slowed to 12.0% due to administrative cuts in regulated utility tariffs."The inflation continues to be shaped by strong domestic demand outpacing supply. Secondary effects from tariff reforms and fuel market liberalization are still feeding into price expectations," the central bank stated.Household inflation expectations for the year ahead rose to 14.7% and remain volatile, while market professionals' expectations for 2026 inflation also increased slightly to 10.8%.While global food prices have declined in recent months, they remain elevated, with continued increases for grains and sugar, the bank said. It noted that inflation is slowing in Russia due to tight monetary policy and remains stably low in the European Union."The U.S. Federal Reserve continues to gradually lower its rate, while noting growing inflationary risks linked to trade policy," the central bank said in a statement. "Geopolitical tensions are rising, which increases uncertainty and could create a higher inflationary backdrop."A SHADOW OF TAX DOUBTThe National Bank of Kazakhstan identified the practical implementation of a major tax reform as a significant risk to inflation, despite the economy growing 6.5% year-on-year in 2025.High growth rates were maintained in the transport, construction, trade, extractive, mining, and manufacturing sectors."Pro-inflationary risks are primarily domestic, driven by demand outpacing supply and lingering secondary effects from higher regulated prices and fuel costs. "Additional uncertainty stems from the parameters and format of planned large-scale quasi-fiscal stimulus, which could reduce the disinflationary effect of the republican budget consolidation," the bank noted.A key concern is the business adaptation to the tax reform, which includes raising the value-added tax (VAT) rate from 12% to 16% starting in 2026 and broadening the taxpayer base in the coming quarters.The bank highlighted several factors working to lower inflation: moderately tight monetary policy, a slowdown in unsecured consumer lending (with issuance growth at 7.3% year-on-year for 11 months of 2025), a reduction of excess liquidity via higher minimum reserve requirements, gold purchase mirroring operations, and a strengthening tenge.The National Bank said it will continue monitoring price dynamics and assessing joint initiatives under the 2026-2028 Macroeconomic Stabilization and Welfare Program and the Inflation Control Measures Package.The next scheduled decision on the base rate by the bank's monetary policy committee will be announced at 12:00 p.m. Astana time on March 6, 2026. (ICE ALMATY)

Fonte notizia: INTERFAX