National Bank keeps base rate unchanged

©️ Tengrinews.kz / Turar Kazangapov

Tengrinews.kz - Kazakhstan’s National Bank has decided to keep the base rate at 16.5 percent.

On Friday, April 11, the Monetary Policy Committee of the National Bank announced its decision to maintain the annual base rate at 16.5 percent, with an interest rate corridor of +/- 1 percentage point.

"Given the current balance of inflation factors, the pace of inflation, pro-inflationary trends, and high external uncertainty, conditions are not yet in place for lowering the base rate in the near term," the National Bank stated.

The next scheduled decision on the base rate by the Monetary Policy Committee will be announced on June 5, 2025, at 12:00 P.M.

What is the base rate?

The base rate is the percentage at which the National Bank lends short-term funds to commercial banks and accepts their deposits. It plays a crucial role in setting borrowing costs for consumers and influences inflation levels in the country. In simple terms, the base rate serves as a benchmark for the economy, particularly for the banking sector. The National Bank adjusts the rate based on economic indicators, using it as a primary tool of monetary policy.

How does the base rate affect the economy?

The central bank uses the base rate to regulate the money supply and, ultimately, inflation. By raising or lowering the rate, the regulator influences economic activity. A lower rate injects more money into the economy, making loans cheaper for businesses, increasing investments, and stimulating economic growth. Conversely, raising the rate helps curb inflation by reducing the money supply and encouraging savings over spending and investment.

Impact of a rate cut on the tenge

A reduction in the base rate may weaken the national currency in the short term, as cheaper money can prompt investors to sell off tenge assets. However, economic growth and lower inflation could strengthen the currency in the medium term.