In November 2022, the monetary conditions continued to slightly tighten. This was due to the REER formation at a level above its potential with the continued strengthening of the real effective exchange rate of tenge, as well as the reduction of the negative gap in the real interest rate.
The RMCI value has moved into the zone of restraining monetary conditions for the first time since May 2022. Taking into account the NBK’s latest rhetoric on a clear intention to complete the cycle of rate hikes, the impact of the interest component in the short term (until inflation moves into a downward trend) will have an effect close to neutral. As inflation declines, as well as if the positive gap in the REER remains, monetary conditions will be restraining closer to neutral, so as not to suppress business activity and cool the increased inflationary background.
The components of the Monetary Conditions Index continue to have conflicting effects on inflationary processes and economic prospects. The exchange rate component restricts them, while interest rates have a more stimulating effect on business activity growth and weakly limit consumer and investment demand.
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The Short-term Economic Indicator showed solid growth and amounted to 5.0% in the first month of 2023.
Ежемесячный обзор инфляции: причины, компоненты, прогнозы