Kazakh central bank cuts rate further but signals easing cycle coming to end

Kazakh central bank cuts rate further but signals easing cycle coming to end
By bne IntelliNews November 15, 2016

Kazakhstan's central bank cut its policy rate to 12% from 12.5% on November 14 citing easing price growth. Further cuts, however, would be harder to justify, the bank said in a sign that its easing cycle might be coming to an end.

Kazakh annual inflation eased to 11.5% in October from a 16.6% hike in September, confirming the bank’s expectations that inflation is on a downward trend. The rate cut decision also reflects a “continuing pace of de-dollarization of bank deposits, and reduced inflation expectations of households”, the bank said in a statement.

October was the third straight month to see price growth easing. Previously, inflation had been on a rising trend for 11 months after the central bank’s decision in August 2015 to abandon its currency peg saw the tenge lose over 40% of its value against the US dollar. The Kazakh currency, however, recovered sharply in August and September on the news of OPEC’s agreement to consider a freeze in oil production in November. Increased confidence in the local currency saw the share of deposits in foreign currency decrease from 58.3% in September to below 57% in October 2016.

Since the beginning of the year, the bank bank cut its benchmark by a cumulative 500 basis points. The bank said further rate cuts would require “a more cautious approach and a thorough rationale”. “The risks for price stability and confidence in the tenge at lower levels of interest rates may increase,” the regulator added.

The central bank expects annual inflation to gradually ease to 8% by end-2016 and estimates it will remain within the bank’s target range of 6%-8% throughout 2017 in the absence of negative shocks. The bank's next monetary policy meeting is scheduled for January 9.

Data

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss