Kazakhstan raises base interest rate: what it means

Tengrinews.kz – Today, the National Bank of Kazakhstan increased the base interest rate to 18% per year with a corridor of ±1 percentage point. The base rate serves as the main benchmark for all loans and deposits in the country. Here’s what this change means for ordinary Kazakh citizens.

What is the base rate

The base rate is the primary tool of the National Bank’s monetary policy. It indicates the interest rate at which banks can borrow money and largely determines the rates for loans and deposits for individuals and businesses.

Why the rate is increased

Raising the base rate is intended to control prices and maintain the stability of the tenge. When the rate goes up:

• Loans become more expensive – people and businesses borrow less and spend less, which slows price growth.
• Deposits become more profitable – it’s more attractive to save money in banks than to spend it.
• The tenge strengthens – investments in the national currency become more appealing.
• In simple terms, increasing the rate helps reduce inflation, stabilize prices, and strengthen the tenge.

Inflation means that money loses value over time – goods and services become more expensive, and the same amount of money buys less than before. At its previous meeting, the National Bank noted that inflation would not significantly slow in the coming months and signaled the possibility of tightening monetary policy, including raising the base rate to bring inflation back to the target of 5%.

This is the sixth rate adjustment this year:

• January 17 – 15.25%, unchanged.
• March 7 – increased to 16.5% due to updated inflation and growth forecasts.
• April 11, June 5, August – kept at 16.5%, considering current inflation and risk balance.
• October 10 – raised to 18% with a ±1 percentage point corridor.

The Committee on Monetary Policy of the National Bank decides on rate changes. Meetings are held eight times a year according to a pre-approved schedule. The next session is scheduled for November 28.