Astana, 5 November, . The National Bank has published a study describing its Quarterly Projection Model, the results of which, it says, form the basis of monetary policy decisions, the bank said.
Paper No. 2026-11 came out on 3 November in the series “Economic Studies of the National Bank” on the research page. It was written by Moldir Samat, Konstantin Orlov and Amantay Bukenov of the Monetary Policy Department and by Karel Musil, assistant professor at the Prague University of Economics and an IMF economic policy adviser. The bank adds a caveat: the views in the study reflect the authors’ position and may differ from the National Bank’s official position.
The model, QPM, is called semi-structural: it combines economic theory with the country’s features and is simpler than large models that derive everything from the behaviour of people and firms. The National Bank has used it since 2016 in its Forecasting and Policy Analysis System, introduced with IMF experts. Every quarter it is used to build the baseline forecast and alternative scenarios, assess domestic and external shocks and prepare recommendations on the base rate.
The model also has features specific to Kazakhstan. Its target variable is core inflation: regulated utilities and fuel, whose prices depend largely on administrative decisions, are removed from it. In the forecast they are set outside the model. The remaining prices are split into food and non-food goods and services. The external benchmark for food is the FAO cereal price index, and for other goods inflation in Russia, China and the European Union. The model separately takes into account spending by the state and the quasi-public sector and oil prices.
The rate rule works like this: the National Bank reacts not only to the deviation of inflation from target and to the output gap but also to the deviation of the exchange rate from equilibrium. The weight of the exchange rate is set by the capital mobility coefficient. At the start of the inflation-targeting regime it was 0.1; now it is 0.4. The authors explain the rise by lower dollarisation, the country’s greater involvement in global financial flows and more transparent communications by the National Bank. The inflation target in the model is 5% year on year.
The model also shows how the rate works. The rate itself reacts to a shock at once, while output and inflation fall only after several quarters. Higher oil prices strengthen the tenge and lower inflation. A fiscal impulse speeds up inflation: the economy returns to equilibrium before prices return to target.
What it means: The paper explains why rate decisions work with a delay: the effect on prices comes after quarters. It also shows that the National Bank keeps in mind not only inflation but also the exchange rate, oil and budget spending.
Who benefits: In the authors’ view, the National Bank itself: the model keeps forecasts consistent and helps assess risks and the consequences of policy options. For banks and analysts, the open description gives the rules by which the regulator reacts to inflation and the exchange rate.
Background: A semi-structural model is a middle ground between a purely statistical model and a “structural” one in which every equation is derived from the behaviour of people and firms: some links are taken from theory, some fitted to the country’s data. The quarterly projection model was devised at the Bank of Canada in the early 1990s, and in 2006 IMF economists fixed its “canonical” scheme of four parts: demand, supply, interest rate parity and the rate rule. The Phillips curve is the link between inflation and the use of the economy’s capacity; it is named after the New Zealand economist Alban William Phillips, who described it in 1958. The IS curve (from the English investment–saving) links demand and the real rate. The Taylor rule is a formula by which the rate depends on inflation and the output gap; the American economist John Taylor proposed it in 1993. The output gap is the percentage deviation of actual output from potential. The transmission mechanism is the path by which a rate decision reaches prices; “transmission” comes from the Latin transmissio, “handing over”. Inflation targeting is a regime in which a central bank announces an inflation target and subordinates the rate to it.
