NBK holds its base rate unchanged

KAZAKHSTAN - In Brief 17 Jan 2025 by Evgeny Gavrilenkov

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The National Bank of Kazakhstan announced today that it decided to keep the base rate at 17.25%, quoting the usual symptoms, such as rising inflationary pressures, some signs of domestic demand overheating, and the lack of spare production capacities. Inflation in Kazakhstan remained at 0.9% m-o-m in recent months and reached 8.6% in 2024 as a whole. The NBK referred to high inflation in Russia (the country’s main trade partner, at least on the import side) and the CBR’s recent decision to hold its key rate high and unchanged. The NBK referred to increased budgetary spending and rapidly expanding domestic credit as key factors fueling domestic demand. We recently also mentioned that retail sales growth has steadily accelerated in recent months on the back of these factors.Meanwhile, fresh statistical releases from the Bureau of National Statistics provide more color on these issues. Today, the BNS reported that investments in production capacity grew by 7.5% in 2024 and became one of the key drivers of reportedly accelerated economic growth. Interestingly, according to the Bureau, investments grew y-o-y by a mere 3.1% in 11M24, implying a too-fast acceleration in December alone and casting some doubts about the reliability and quality of monthly statistics.Investment statistics suggested that the role of the government increased in 2024, as a share of government sources as a percentage of total investments increased to 21.2% from 16.7% in 2023. The share of the companies’ own sources fell to 64.4% last year (down from 72.2% in 2023). The contribution of bank credits also increased. Meanwhile, investments in the mining sector fell by 20.1% in 2024 compared to 2023. Inve...