National Bank Cuts Base Rate to 17%
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The Monetary Policy Committee of the National Bank of the Republic of Kazakhstan has decided to set the base rate at 17.00% per annum with a corridor of +/- 1 percentage point. The decision is based on the results of the forecast round, updated assessments of key macroeconomic indicators, and the balance of inflation risks, nationalbank.kz reports.
Annual inflation continued to ease. In May, it stood at 10.4%, down by 2.5 percentage points from its peak of 12.9% in September last year.
Food inflation declined to 10.7%. This was driven by slower price growth for fruit and vegetables, socially important food products, and certain imported goods. Non-food inflation remained unchanged at 11.7%. This reflected the stronger tenge and signs of stabilizing consumer demand, including a moderation in consumer lending growth. Services inflation continued to decline, reaching 8.7%, mainly due to more stable demand and slower growth in utility tariffs.
Monthly inflation slowed to 0.7% in May, from 0.8% in April. Core inflation and seasonally adjusted inflation also declined to 0.7%.
One-year-ahead inflation expectations stood at 12.7% in May. Over the past two months, they have ranged between 12.4% and 12.7%. This marks an improvement from the period since mid-last year, when expectations had remained persistently above 13-14%. At the same time, regulated price reforms continue to play a significant role in shaping these expectations. Meanwhile, professional market participants’ inflation expectations for the end of 2026 remain unchanged at 10.0%.
Global food prices continue to rise moderately, driven by higher prices for vegetable oils, meat and cereals, while prices for sugar and dairy products are declining.
In Russia, inflation is showing signs of deceleration. In the EU and the US, the disinflation process has stalled amid persistently high energy prices. Against this backdrop, major central banks continue to take a cautious approach to monetary policy and emphasize their readiness to adjust policy if needed.
Under the updated baseline scenario, a higher level of Brent oil prices is assumed through the end of this year, at USD 90 per barrel, compared with the previous forecast assumptions. Oil prices continue to be affected by persistent geopolitical tensions in the Middle East. The forecast assumes a gradual decline in oil prices to USD 75 per barrel in 2027 and USD 65 per barrel in 2028.
The inflation forecast for 2026 has been revised down to 9-11%, from the previous range of 9.5-11.5%. The revision reflects a faster-than-expected actual decline in inflation, limited pass-through from the VAT increase to consumer prices, and the strengthening of the tenge. The National Bank expects inflation to move into single digits this year. This will be supported by moderately tight monetary conditions and joint measures with the Government to ensure macroeconomic stability. Inflation is projected to slow to 5.5-7.5% in 2027. In 2028, it is expected to stabilize close to the 5% target. This will be supported by a normalization of the external inflation environment, lower inflation expectations, a narrowing of quasi-fiscal stimulus, and fiscal consolidation.
The balance of risks to inflation remains tilted to the upside, although these risks have become less pronounced. At the same time, restrained domestic demand in the first half of the year and favorable external conditions, which supported the strengthening of the tenge, have partly offset accumulated pro-inflationary pressures. The main domestic risks stem from an acceleration in demand and expansion of monetary aggregates amid large-scale quasi-fiscal stimulus, volatile inflation expectations, and the actual execution of utility tariff and fuel price reforms. External risks are associated with persistent geopolitical tensions, which may increase external inflationary pressure and raise volatility in global markets.
The GDP growth forecast for 2026 has been revised up to 4.5-5.5%. The revision reflects stronger actual economic activity and more favorable oil price assumptions. GDP growth is expected to stand at 3.5-4.5% in 2027-2028. In the medium term, economic growth will be shaped by more balanced domestic demand and lower oil prices.
The slowdown in inflation achieved so far, together with the improved forecast, created room to reduce the base rate at this meeting. The decision reflects the accumulated improvement in inflation dynamics and the revision of forecast estimates.
At the same time, moderately tight monetary conditions need to be maintained. This is necessary to bring inflation down to single digits this year and to achieve the target in the medium term. Further decisions will be made based on incoming data on inflation, its trajectory relative to the forecast, domestic demand dynamics, the execution of fiscal parameters, and the scale and effects of quasi-fiscal stimulus.
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Kazakhstan to Build Its First Sanitary Ware Manufacturing Plant
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Kazakhstan is set to establish its first plant for the production and assembly of sanitary ware and bathroom accessories. The project will be implemented by Spanish company Roca Group, Kazakhstan’s Ministry of Foreign Affairs reported.
The project will involve investments of 44.1 billion tenge. Once operational, the facility will be capable of producing up to 500,000 units annually and is expected to create around 300 permanent jobs.
Gabidulla Ospankulov, Chairman of the Investment Committee of Kazakhstan’s Ministry of Foreign Affairs, met with company representatives to discuss the progress of the project.
During the meeting, Ospankulov outlined the government support measures available to investors, including tax incentives, and highlighted the advantages of doing business in Kazakhstan.
The ministry added that an investment agreement for the project has been signed by the Government of Kazakhstan, the administration of the Kyzylorda Region and Roca Group.
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National Bank Sees No Tenge Weakening After Base Rate Cut
Kazakhstan’s National Bank does not expect the tenge to weaken significantly following its decision to lower the base interest rate, National Bank Governor Timur Suleimenov said at a briefing, a correspondent reports.
We do not expect the tenge to weaken as a result of the change in the base rate. A 17% base rate preserves the attractiveness of tenge-denominated assets. In other words, it remains far more beneficial for people to invest in tenge assets than in foreign-currency assets. Accordingly, a one-percentage-point reduction will not alter the attractiveness of tenge assets, including bank deposits, corporate bonds, and government and quasi-government debt instruments. Therefore, we expect demand for tenge assets to remain at its current level, which means the exchange rate is unlikely to change significantly," Suleimenov said.
At the same time, the National Bank chief noted that the exchange rate may fluctuate under the influence of structural factors.
This is largely a matter of demand. At the beginning of the year, demand is usually lower because it takes time for budget funds to reach programme administrators and for them to announce various tenders. As a result, there is little demand for foreign currency during that period. Around this time of year, however, tender winners have typically been determined, and market participants begin purchasing US dollars. This seasonality is always present," he said.
According to Suleimenov, the holiday season also contributes to higher demand for foreign currency, as Kazakhstanis increasingly purchase dollars for overseas travel, putting some pressure on the exchange rate and contributing to a modest rise.
However, he stressed that the fundamental economic outlook remains favourable.
Oil prices are rising. Prices reflected in the metals index have also increased. In terms of foreign-currency earnings entering the market, the situation is positive. Unless there are external shocks, I see no grounds for any weakening of the national currency," the National Bank governor said.
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Kazakhstan Sows 20.9 Million Hectares During Spring Planting Campaign
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Spring fieldwork is continuing across Kazakhstan, with agricultural crops having been sown on 20.9 million hectares so far, according to operational data provided by regional authorities and cited by the Ministry of Agriculture.
Grain crops account for the largest share of the planted area at 15 million hectares. Oilseed crops have been sown on 4.2 million hectares, while fodder crops cover 1.2 million hectares.
In addition, cotton has been planted on 164,300 hectares, potatoes on 128,400 hectares, vegetables on 122,100 hectares, melons and gourds on 83,900 hectares, and sugar beet on 22,000 hectares.
The planting campaign is progressing most actively in the country's key grain-producing regions. A total of 5.3 million hectares have been sown in the Akmola Region, 5 million hectares in the Kostanay Region, and 4.1 million hectares in the North Kazakhstan Region.
More than 133,900 tractors are being used in the sowing campaign, along with around 5,600 high-performance seeding complexes, 71,400 seeders, and 188,500 tillage implements.
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Kazakhstan Records Electricity Surplus in First Five Months of 2026
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Kazakhstan generated 53.6 billion kWh of electricity in January-May 2026, while domestic consumption totaled 53.3 billion kWh, resulting in an electricity surplus of approximately 300 million kWh, the Ministry of Energy reported.
According to the ministry, the positive energy balance reflects the stable operation of the country's power generation facilities, the balanced development of the national energy system, and the reliable supply of electricity to meet domestic demand.
Electricity generation in Kazakhstan is projected to reach 126.5 billion kWh by the end of 2026.
To further strengthen the national power system, the country plans to commission 2.6 GW of new conventional and renewable energy capacity this year. The expansion program includes the launch of four gas-fired power plants and the enlargement of two existing energy facilities.
In addition, 10 new renewable energy projects are scheduled to come online, including four wind farms, five solar power plants, and one hydropower station.
The Ministry of Energy expects these projects to fully eliminate the country's electricity deficit by the end of the first quarter of 2027 and secure a sustainable electricity surplus by 2029.
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Which Goods and Services Became More Expensive in Kazakhstan in May
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Annual inflation in Kazakhstan slowed to 10.4% in May 2026, down from 10.6% a month earlier. Consumer prices increased by 0.7% month-on-month. The highest annual price growth continued to be recorded for non-food products and food items, which rose by 11.7% and 10.7%, respectively, according to the Bureau of National Statistics.
On a monthly basis, food prices increased by 0.4%, non-food products by 0.6%, and paid services by 1.1%.
Among food products, prices fell for cucumbers by 25.4%, tomatoes by 25.1%, sweet peppers by 8.3%, garlic by 3.1%, mandarins by 2.6%, beetroot by 2%, and both sunflower oil and canned corn by 0.4%. At the same time, lamb prices rose by 4.7%, beef liver and sprats in oil by 3.3%, apples by 3.1%, sausages by 1.7%, drinking milk by 1.1%, eggs by 0.6%, and kefir by 0.4%.
Among non-food products, prices declined for frying pans by 4.8%, dishwashers by 3.3%, books by 2.5%, smartphones by 1.5%, and indoor plants by 0.6%. Meanwhile, cameras became 7.4% more expensive, irons rose by 3.1%, laundry soap by 2.7%, and pharmaceutical products by 1.7%.
The cost of children's amusement rides increased by 6.6%, transport services by 1.5%, and car wash services by 0.7%.
On an annual basis, inflation stood at 10.4% in May 2026. Prices for non-food goods rose by 11.7% year-on-year, food products by 10.7%, and paid services by 8.7%.
Compared with May 2025, prices for cucumbers fell by 35.2%, onions by 25.1%, tomatoes by 24.3%, potatoes by 7.5%, bananas by 4.9%, and rice by 4.3%. At the same time, apples became 9.8% more expensive, frozen fish rose by 8.5%, black tea by 7.6%, pasta horns by 6.6%, and granulated sugar by 2.3%.
Compared with May 2025, prices for domestically assembled passenger cars declined by 17.9%, azithromycin by 6%, and microwave ovens by 1.1%. Meanwhile, laundry soap rose by 10.5%, men's trousers by 10.2%, and both washing powder and household appliances by 9.1%.
Among services, the most significant annual increases were recorded in transport services, up 11.1%, hotel services, up 10.3%, education services, up 8.9%, and mobile communications, up 7.6%.
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