National Bank of Kazakhstan leaves rates unchanged in January

Bank keeps rates at record high: At its meeting on 23 January, the National Bank of Kazakhstan (NBK) held its base rate at a record high of 18.00% for a second consecutive meeting, in line with market expectations.

Inflation concerns linger: The Bank opted not to cut rates, as inflation remained elevated, having ended 2025 at 12.3%, driven by sustained domestic demand outstripping supply capacity. Moreover, rising inflation expectations, a January 2026 VAT hike, planned quasi-fiscal stimulus and higher utilities and fuel prices due to price liberalization are driving the current restrictive policy stance. Meanwhile, the NBK ruled out a rate hike, as consumer credit growth slowed, while a stronger tenge has provided additional disinflationary support.

Rate cuts unlikely before H2 2026: The Bank indicated that the base rate is highly likely to be maintained at its current level throughout the first half of 2026. This cautious stance reflects uncertainty stemming from the impact of tax system changes and the deregulation of utility tariffs and fuel prices. Accordingly, our panelists expect the NBK to begin rate cuts in Q3 2026, with around 250 basis points of cuts by the end of the year. The Bank will reconvene on 6 March.

Panelist insight: Dmitry Dolgin, CIS Economist from ING, mentioned additional risks that could limit the amount of cuts: “We see additional upside risks to inflation not highlighted by the central bank: The residual inflationary effect of the supportive fiscal policy of 2025, reflected in the persistently high state budget deficit of c.2.7% of GDP in 2025. A sharp early January spike in Russia’s CPI following its own VAT increase, which could spill over into Kazakhstan, given strong trade links.”

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