Loans and deposits: what to expect from the National Bank's new decision

Tengrinews.kz — The National Bank of Kazakhstan is set to announce its latest base rate decision on July 24. Following June's cut, most experts anticipate the regulator will pause and maintain the rate at 17 percent.

Why the rate is likely to remain unchanged

The regulator's previous meeting regarding the base rate took place on June 5. At that time, the rate was reduced by one percentage point to 17 percent. The National Bank attributed this decision to a steady slowdown in inflation and public inflationary expectations, as well as moderated price growth in Russia, a major source of food imports for Kazakhstan. Additionally, the decision factored in the consistent strengthening of the tenge and global oil prices that exceeded earlier forecasts.

While the National Bank noted a rise in global food prices, it characterized the increase as moderate. Overall, in early June, the regulator revised its year-end inflation forecast downward from 9.5–11.5 percent to 9–11 percent. Although inflationary risks persist, they have become less pronounced, the regulator stated six weeks ago. The inflation rate remains the key metric for base rate decisions.

Expert forecasts

Ahead of the upcoming meeting, experts and market participants largely agree that the National Bank will hold steady at 17 percent rather than continuing to cut. Economist Ruslan Sultanov, writing on his Tengenomika Telegram channel, points to external uncertainty, including rising oil prices and the moderately tight monetary policies of leading global central banks. Sultanov believes the National Bank must weigh these factors alongside domestic inflation.

Analysts at BCC Invest expect expect a further rate reduction to 16.5–16 percent, but not until September. The National Bank's next meeting is scheduled for September 4. Experts believe the rate will then remain at that level through the end of the year, as persistent inflationary risks will likely prevent further cuts.

Finally, a survey conducted by the National Bank itself among professional market participants and international institutions showed that expectations for the base rate remain unchanged. Respondents anticipate the rate will settle at 16 percent by the end of this year, 12.8 percent in 2027, and 10.6 percent in 2028.

What the base rate means for Kazakhstanis

The base rate determines the cost of money in the economy and serves as a benchmark for the banking sector. It largely dictates the interest rates for consumer loans, mortgages, deposits, and both government and corporate borrowing.

Generally, a lower base rate leads to cheaper loans, but it also results in a gradual decline in returns on bank savings accounts.