Astana, 23 October. National Bank Governor Timur Suleimenov, at a press conference after the base rate decision, attributed the increased supply of dollars on the market to export revenue, non-resident investment and foreign borrowing.
He also said the monetary policy committee chose between holding the rate, cutting it by 0.25 and by 0.5 percentage points, and did not consider a 1-point cut.
Suleimenov named exports as the first source of currency: oil, he said, has risen by 70–80%, copper and other metals by 11–15%. The other two are non-residents investing in Kazakhstan's government debt and foreign loans raised by Baiterek, Samruk-Kazyna, private companies and banks. In his view, it is inaccurate to talk of a "glut" of dollars; it is more correct to speak of additional currency supply compared with the previous period.
On the stronger tenge, the governor said it played a significant role in the rate decision: Kazakhstan imports about 28% of its food and about 58% of intermediate and investment goods. "We understand the ratchet effect: once prices settle, they rarely roll back, but at least this has made it possible not to raise prices further," he said. The ratchet effect in economics is the tendency of prices to rise easily and almost never fall, like a ratchet that turns only one way.
On the choice of step, Suleimenov explained that some committee members proposed holding the rate, some a 0.25-point cut and some 0.5. "At these rate levels a 0.25 cut probably would not have a sufficient effect, so we decided to go for 0.5," he said. The National Bank does not intend to cut the rate faster because of a statistical slowdown in inflation in 2027, when the effect of the VAT increase drops out of annual data.
What it means: The strong tenge is the result of expensive oil, inflows of non-resident money and foreign borrowing, and it helped the National Bank cut the rate. But it cannot bring prices back down: at best it slows their rise.
Who benefits: Importers and buyers of imported goods, who get cheaper currency; borrowers, who get a lower rate. Exporters earning in dollars see their tenge income reduced by the strong tenge.
Background: On 23 October the National Bank cut the base rate from 16.25% to 15.75% and called a further change before the end of 2026 unlikely; the next decision is due on 4 December.
List of sources used: BES.media, Zakon.kz
Artificial intelligence was used in preparing this material.
