Kazakhstan Hikes Key Rate After President Weighs in on Inflation
(Bloomberg) -- Kazakhstan’s central bank delivered its second interest-rate hike in a row, less than two weeks after the president of Central Asia’s largest energy producer ordered policy makers to rein in inflation.
“Subsequent key rate decisions will depend on how effectively the government’s anti-inflationary measures are implemented,” the National Bank said in a statement accompanying the decision to lift the key rate by 25 basis points to 9.50%.
Kassym-Jomart Tokayev used his Sept. 1 state-of-the-nation address to slam the central bank for letting the pace of price growth run out of hand, and followed up with a second warning days later. Responding to the speech, central bank Governor Yerbolat Dossayev said he’ll take the steps needed to curb inflation to the central bank’s target of between 4% and 6% next year.
Inflation quickened to 8.7% in August and the central bank predicted that price growth for 2021 would come in at 7.5% to 8.5%, according to the statement. S&P Global Ratings forecasts a rate of 8.5% for this year, driven by government spending and higher prices for imports.
The central bank’s rates corridor, formed from the overnight deposit and lending rates, was kept at plus or minus 1 percentage point around the benchmark.
The next key rate decision is scheduled for Oct. 25, according to the statement.
- Kazakhstan’s economy expanded 2.7% in Jan.-July after a contraction in the first quarter; The central bank sees GDP growth at 3.5% to 3.8% in 2021, and at 4.1% to 4.4% in 2022, according to its statement
- The Unified Pension Fund, run by the central bank, transferred 1.7 trillion tenge ($4 billion) to customers Feb. 1-Aug. 11 as stimulus to help improve living conditions
- The tenge is little changed against the dollar since the previous key rate decision on July 26
- The national oil fund and state companies sold $1.1 billion on the domestic market in August, while the central bank said it didn’t intervene in the currency market
©2021 Bloomberg L.P.