The decision was based on the updated macroeconomic forecasts of the National Bank of the Republic of Kazakhstan.
The main reasons were as follows:
- still high rates of inflation growth despite their observed slowdown;
- the underlying price pressure remains high;
- unstable inflationary expectations contributing to a prolonged pressure easing;
- rising risks of accelerating global inflation due to a tight labour market, strong consumer demand and the opening up of China’s economy.
Improvement in the conjuncture of internal and external factors contributed to a more positive revision of forecasts:
|The NBK forecasts, in %, YoY
The key risks of the forecast are:
- on GDP growth rates: issues of access of Kazakhstan’s exports to international markets;
- on inflation: supply shocks in the market of fruit and vegetable products, which may lead to an acceleration of food inflation; likely reforms of housing and utility tariffs and fuel prices, their direct and indirect impact on consumer prices; acceleration of inflation in the Russian Federation cause of rising budget expenditures, the ruble weakening and sanctions.
! A new signal to the market: the rate will remain unchanged until the summer of 2023.
Jusan Analytics comment: the current decision was due to a balance of internal and external factors and was confirmed by the forward guidance of the regulator. Ensuring the preservation of restraining monetary conditions was a rational action for following reasons:
- to reduce the impact of the risks of tenge weakening due to a variety of factors;
- to limit consumer demand for a long time to achieve a disinflationary effect on prices;
- adherence to the previously indicated direction contributes to increased confidence and, as a result, stabilization of inflation expectations.