Kazakhstan's central bank cuts base rate to 15.75% and signals a pause
The fourth cut since June is twice what most analysts expected, and the committee now says the chance of another change before the end of 2026 is low.
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The National Bank of Kazakhstan lowered its base rate to 15.75 per cent on 23 October, according to the Monetary Policy Committee's press release. The 50 basis point cut from 16.25 per cent repeats September's step, Forbes Kazakhstan reported.
The corridor stays at plus or minus one percentage point. The rate has now fallen by 2.25 percentage points from 18 per cent since June, the fourth cut in four months, Kursiv reported, and the committee said the probability of another change before the end of 2026 is low. The step was twice the size most analysts had expected, and it takes the rate below the lowest year-end estimate that committee members recorded in September, as the Data Desk's preview of the meeting noted. Banks pricing tenge loans and investors holding government bonds now have a rate that the bank says is unlikely to move again at its last meeting of the year, on 4 December.
The committee said the continued fall in annual inflation and in inflation expectations had created room to lower the rate, and that the decision keeps monetary conditions moderately tight, which it called necessary to lock in disinflation and return inflation to the 5 per cent target in 2028. It also credited the tenge's exchange rate with helping to slow price growth.
Inflation at 9.3 per cent, expectations lower
Annual inflation was 9.3 per cent in September, down for a twelfth month in a row, the release said, from 9.8 per cent a month earlier according to Kursiv. Food inflation slowed to 8.5 per cent from 9.5 per cent, helped by cheaper fruit and vegetables and slower meat price rises, and non-food inflation eased to 11.0 per cent from 11.4 per cent as fuel prices rose more slowly over the year.
Services inflation held at 8.9 per cent, with prices of non-regulated services still rising quickly. Monthly inflation was 0.6 per cent, the same as in August, and 0.7 per cent after seasonal adjustment against 0.9 per cent a month earlier. The median of the bank's seasonally adjusted core inflation estimates was 0.7 per cent, which the release said points to persistent price pressure.
Inflation expectations for the year ahead fell to 11.8 per cent in September from 12.1 per cent in August. Market participants surveyed by the bank lowered their forecast for end-2026 inflation to 9.5 per cent from 10.0 per cent, and their forecast for 2027 to 8.3 per cent from 8.5 per cent.
The risks the committee lists
The release said the balance of risks remains tilted towards higher inflation. At home it pointed to fiscal and quasi-fiscal stimulus feeding domestic demand. Abroad it cited high energy prices linked to the situation in the Middle East and rising food prices, with the FAO food price index at 136.0 points in September, up 1.5 per cent on the month and 5.8 per cent on the year.
It also flagged a base effect. A moratorium on increases in utility tariffs ran from October 2025 to March 2026 and came with a 14 per cent cut in utility tariffs in the fourth quarter of 2025, so annual inflation could edge up towards the end of this year. The economy is growing faster than the inflation picture alone suggests: GDP rose 4.2 per cent in January to September, led by non-commodity sectors, and fixed investment rose 7.0 per cent, the release said.
Markets had expected a smaller move. Most analysts polled before the meeting looked for a cut of 25 basis points to 16 per cent, and SQIF Capital's base case was no change, though it allowed for a 25 basis point cut, Kursiv reported, while 85 per cent of the experts in an Association of Financiers of Kazakhstan survey in early October had expected a cut of some size. The committee's September cut to 16.25 per cent had come with a warning that the scope for further easing was limited.
What the bank said about December
The guidance has hardened. Given the current balance of risks, the probability of a change in the base rate before the end of 2026 "остается низкой", remains low, the release said. Any further reduction "будет зависеть от подтверждения устойчивого ослабления ценового давления", will depend on confirmation of a sustained easing in price pressure, and future decisions will take account of inflation, inflation expectations and changes in the balance of risks.
With the base rate at 15.75 per cent and September inflation at 9.3 per cent, the gap between the two is 6.45 percentage points, a Data Desk calculation from the published figures, down from 6.95 points before the cut. The next decision on the base rate is scheduled for 4 December at 12:00 Astana time, the release said.