Kazakhstan Maintains Base Rate at 16.5%, Anticipated to Hold Until Year's End
The National Bank of Kazakhstan (NBK) has opted to maintain a tight monetary policy stance, keeping the base interest rate at 16.5% throughout 2025, in an effort to control inflation and stabilize inflation expectations. This decision comes amidst elevated inflation levels and a strong economic growth forecast of around 5-6% for the year.
Inflation, as reported in June 2025, stood at 11.8%, primarily driven by higher service costs (16.1%) linked to tariff reforms and rising food prices (10.6%). The NBK and Eurasian Fund for Stabilization and Development (EFSD) anticipate inflation to remain high, around 10.5-12.5%, for the remainder of 2025. However, they forecast a gradual decline to approximately 9.5-11.5% in 2026 and a further reduction to 5.5-7.5% by the end of 2027.
The EFSD has suggested that the official inflation target of 5% may not be realistically achieved in the medium term due to inflationary drivers such as ongoing housing and utilities reforms and a recent increase in VAT to 16%.
Despite these inflation challenges, Kazakhstan's economy continues to grow robustly. This growth is being driven by strong domestic demand, higher investment, and expansions in sectors like transport, construction, manufacturing, and mining. However, this persistent demand outpaces production capacity and contributes to ongoing price pressure.
Recent legislative and policy changes have also impacted inflation. Ongoing tariff and tax reforms, including the VAT increase to 16%, are contributing factors to higher inflation. The NBK emphasises the need to maintain tight monetary policy in the context of stable domestic demand, fiscal stimulus, continued consumer lending, and these reforms.
Starting from September 1, 2025, Kazakhstan will impose fines on currency exchange offices for displaying electronic exchange rate boards on the streets, aiming to regulate exchange rate information dissemination and potentially stabilize currency market expectations.
In an effort to further stabilise the economic environment, Kazakhstan has also signed a law on financial market development and consumer protection on June 30. This law introduces measures such as explicit consent for loans issued to young and elderly borrowers, a 24-hour "cooling-off" period for unsecured loans, and a transition to a balanced fiscal policy being coordinated with the government.
Moreover, the phased tariff reform has been adjusted, with no increases in the fourth quarter announced. A slower rise in individual service costs has also been announced, providing some relief to consumers. Additionally, the new law requires in-person loan disbursements, further strengthening consumer safeguards.
These developments underscore a cautious monetary stance combined with targeted fiscal and regulatory measures to manage inflation risks while supporting sustained economic growth in Kazakhstan.
- The National Bank of Kazakhstan (NBK) and the Eurasian Fund for Stabilization and Development (EFSD) acknowledge that maintaining a tight monetary policy stance, along with ongoing business reforms such as tariff and tax adjustments, will help them control inflation and stabilize inflation expectations.
- As Kazakhstan's economy continues its robust growth, driven by various sectors including finance and business, the NBK emphasizes the significance of tight monetary policy to account for factors like stable domestic demand, fiscal stimulus, consumer lending, and ongoing reforms.
