BAKU, Azerbaijan, April 27. The decision to raise the base rate was made amid a significant increase in pro-inflationary factors in the economy, Chairman of Kazakh National Bank Galymzhan Pirmatov said, Trend reports via National Bank.
"National Bank decided to raise the base rate to 14 percent from April 26, 2022, with an interest corridor of +/- 1 percentage point. We are seeing an increase in business activity, consumer and investment demand, and lending to the economy in 1Q2022. These factors, along with fiscal incentives will support local demand," Primakov said.
With limited supply, according to Pirmatov, such measures would transfer into higher prices, higher imports, and a rising inflation trajectory. The role of anti-inflationary monetary policy is now very important for maintaining the savings mood of consumers.
"With help of such a step, we will be able to influence the balance of supply and demand and prevent significant dispersal of inflation that has already reached double-digit values. Therefore, the decision to raise the base rate is a necessary measure for us, to stop the growing risks of inflation. The task of maintaining price stability is the top priority of National Bank," the chairman of National Bank said.
Earlier, National Bank decided to raise the base rate to 14 percent per annum with an interest corridor of +/- 1.00 percentage points. Accordingly, the rate on standing access operations to provide liquidity will be 15 percent and on standing access operations to withdraw liquidity – 13 percent.
The decision to raise the base rate reflects the commitment of the National Bank to conduct an anti-inflationary policy in face of growing inflationary pressure against the backdrop of the realization of geopolitical risks, rising prices in the world, also in countries - Kazakhstan's trading partners, and their transfer to local prices. A significant driver of inflationary processes is the positive fiscal impulse observed for the third year in a row.
