Kazakhstan Central Bank Keeps Key Rate Unchanged, Hints At June Cut

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ALMATY, April 10 (Reuters) – Kazakhstan’s central bank kept its key policy rate unchanged at 11.00 percent on Monday, but said it was now more likely to cut it in the next review on June 5.

The central bank has kept its policy rate relatively high to support the currency, the tenge , and keep inflation in check.

“The sensitivity of inflation to global market conditions, increased state spending in 2017, and positive dynamics of the population’s incomes creates certain inflationary risks,” the bank said in a statement.

“Nevertheless, the growth in business activity seen since the beginning of this year, as well as stable situation on the domestic financial markets, increases the probability of the base (policy) rate cut in the next review in the second quarter of this year.”

The central bank had raised the policy rate as high as 17 percent in early 2016, when the tenge was weakening against the dollar after the authorities abandoned their pegged exchange rate policy.

Buoyed by relatively stronger oil prices, the tenge has gained 6.5 percent against the dollar this year.

(Reporting by Mariya Gordeyeva; Writing by Olzhas Auyezov; Editing by Christian Lowe and Janet Lawrence)