Kazakhstan makes a surprise rate cut, with next move to depend on the tenge
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4 itemsKazakhstan makes a surprise rate cut, with next move to depend on the tenge
Kazakhstan’s central bank keeps surprising as fiscal clarity trumps inflation concerns
ING's Dmitry Dolgin argues the National Bank of Kazakhstan's second consecutive surprise cut—25bp to 16.75%—signals growing confidence in fiscal discipline despite sticky inflation. The decision, a close call per Governor Suleimenov, was tipped by fiscal clarity and quasi-fiscal restraint, not a benign inflation outlook (CPI 10.3% YoY, expectations rising to 13.4%). With no high-impact domestic data in the next 30 days, the focus shifts to the efficacy of fiscal consolidation and FX stability.
KZT: Less support from state FX flows warrants attention
The desk believes that the recent shift in Kazakhstan's foreign exchange policy signals diminishing state support for the tenge, which could hinder any potential appreciation. Per the full note [source], the decision to remove the mandatory sale of 50% of FX export proceeds by quasi-state companies could lead to increased FX availability in the domestic market. Nonetheless, the average FX sales during this period were only around $0.3 billion per month, accounting for just 5% of total FX turnover, suggesting that this adjustment may have minimal immediate impact but reflects a broader trend of reduced state intervention.