The Kazakh central bank has hiked its policy rate from 14.5% to 16% per annum, with a corridor of +/- 1.0 pp, amid Kazakhstan's ongoing struggles with double digit inflation, the national lender said in a statement. The rate is now the highest it has been in six years.
The central bank has increased the key rate five times this year. Annual inflation in Kazakhstan, which stood at 17.7% in September but climbed to 19.7% as of October 26, stood significantly above the regulator's expectations, prompting the chunky rate hike.
Ukraine War-related factors appear to be strong drivers of inflation in Kazakhstan, from supply-chain disruptions that have driven up manufacturing costs to a “migration shock” impacting consumer prices, the bank said. Tens of thousands of Russians have fled to Kazakhstan, pushing up prices for rents, goods and services, since Russian President Vladimir Putin in September announced a military mobilisation to expand troop numbers.
“Increased inflationary expectations are putting pressure on prices and consumer behavior. All this requires tighter monetary conditions to maintain control over inflationary processes in 2023,” the central bank added in a statement.
The monetary policy committee is scheduled to review the policy rate once more on December 5.