Kazakhstan's committee cuts below its own estimates and signals a pause

The National Bank of Kazakhstan's statement of 23 October says that, given the current balance of risks, the probability of a change in the base rate before the end of 2026 "остается низкой", remains low, according to the Monetary Policy Committee's press release.

The sentence arrived with a cut of 50 basis points to 15.75 per cent, below every year-end estimate the committee's members had recorded in September. For a board setting 2027 funding costs off the base rate, the text now says two things at once: the committee has moved further than its own September projections implied, and it does not expect to move again at the year's last meeting on 4 December. Neither sentence is a commitment, and the release repeats that future decisions depend on inflation, expectations and the balance of risks.

From no set path to a limited scope

The wording has tightened over three releases. On 24 July, when the committee cut to 16.75 per cent, its press release said the bank "не задает заранее определенной траектории базовой ставки", sets no predetermined path for the base rate, and allowed for pauses or a change of direction. It warned that current dynamics "может указывать на ослабление дезинфляционного импульса", may point to a weakening of the disinflationary impulse, and said further decisions required more data on how durable the slowdown in inflation was. Annual inflation was then 10.3 per cent and households expected 13.4 per cent over the following year.

On 4 September the committee cut to 16.25 per cent and the Governor's statement said the scope for further cuts was limited, as reported here. The summary of that meeting's deliberations put the members' median estimate for the end-2026 rate at 16.0 per cent, with individual estimates from 15.8 per cent to 16.8 per cent, as the Data Desk's preview of the October meeting reported. The preview noted that a cut of 50 basis points would take the rate below the lowest of those estimates. That is what the committee did.

What the October text adds

The October release also says that any further cut "будет зависеть от подтверждения устойчивого ослабления ценового давления", will depend on confirmation of a sustained easing in price pressure. It gives its reason in one clause: the continued decline in annual inflation and in inflation expectations "сформировало пространство для снижения базовой ставки", formed room for a reduction in the base rate, Forbes Kazakhstan reported, quoting the statement. It keeps the phrase the committee has used since the summer, saying the decision preserves the moderate tightness of monetary conditions that it considers necessary to lock in disinflation and return inflation to the 5 per cent target in 2028, Kursiv reported.

The numbers behind the clause are in the release. Annual inflation slowed to 9.3 per cent in September, a twelfth month of decline. One-year-ahead inflation expectations fell to 11.8 per cent from 12.1 per cent in August, market participants cut their end-2026 forecast to 9.5 per cent from 10.0 per cent, and their 2027 forecast slipped to 8.3 per cent from 8.5 per cent. Against September inflation, the new rate leaves a gap of 6.45 percentage points, a calculation from the published figures, compared with 6.95 points before the cut.

The risk paragraph did not soften. The balance of risks remains tilted towards higher inflation, the release said, naming fiscal and quasi-fiscal stimulus at home and energy and food prices abroad, with the FAO food price index at 136.0 points in September, up 5.8 per cent on the year. It added that the European Central Bank had raised rates for a second time this year and the Federal Reserve for the first time since 2023, and that the moratorium on utility tariff increases from October 2025 to March 2026 leaves a base that could lift annual inflation towards the end of the year.

How the market read the September floor

Before the meeting most analysts expected a cut of 25 basis points to 16 per cent, which would have landed on the committee's median, Kursiv reported; SQIF Capital's base case was no change, though it allowed for a 25 basis point cut, and 85 per cent of the experts in an Association of Financiers of Kazakhstan survey in early October expected a cut of some size. The committee instead went to 15.75 per cent and paired the move with the sentence on 2026.

Read together, the three releases show a committee that first declined to describe a path, then described the scope as limited, then used most of it in one step while telling the market not to expect the rest this year. The release for September was followed by a published summary of the committee's deliberations with members' year-end estimates; a similar document for October would show whether those estimates have moved with the rate. The next decision is scheduled for 4 December at 12:00 Astana time.