Kazakh National Bank Reduces Base Rate
ASTANA, Nov 14 (Reuters) – Kazakhstan’s central bank cut its policy rate to 12.0 percent from 12.5 percent on Monday, citing lower inflation, but signalled it was getting to the end of its easing cycle by saying further cuts would be harder to justify.
The regulator, which will next review the rate on Jan.9, said further easing would require “a more balanced approach and thorough justification” because it could create risks for price stability and undermine confidence in the tenge currency.
The tenge lost nearly half of its value within a few months after the oil-exporting Central Asian nation abandoned its pegged exchange rate policy in August 2015 in favour of a free float.
The central bank has since kept its policy rate relatively high, despite several cuts from the initial 17 percent this year, in order to support the tenge and keep inflation in check.
However, annual inflation dropped to 11.5 percent in October from 16.6 percent in September, prompting Monday’s cut.
“We think that in the near future the base rate will stay at the current level, which on the one hand makes tenge-denominated instruments attractive and on the other hand prevents the outflow of liquidity into the foreign exchange market,” central bank chairman Daniyar Akishev told reporters. (Reporting by Raushan Nurshayeva; Writing by Olzhas Auyezov; Editing by Vladimir Soldatkin and Mark Trevelyan)