ALMATY (Reuters) – Kazakhstan’s central bank is expected to keep its benchmark interest rate
Five of seven analysts polled this week predicted no change, while two forecast cuts to 9.00-9.25%.
The central bank kept the rate unchanged in June after annual inflation was reported at 6.7% in May and 7.0% last month, putting it on track so far to match the bank’s 8.0-8.5% year-end target.
Kazakhstan entered a second COVID-19 lockdown this month after new cases surged following the country’s reopening in May.
“Amid the current uncertainty due to the second wave of the epidemic, the regulator will avoid taking any action and the rate will remain unchanged, although we may see cuts in the medium term as the situation becomes closer to normal,” said Alen Sabitov, senior analyst at Freedom Finance.
Elevated money market rates are also an argument against easing right now, Sabitov added. The benchmark overnight rate <.TONIA> hit an 11-week high of 11% this week and stood 10.5% on Friday.
Eurasian Development Bank analyst Aigul Berdigulova said the central bank may have more room for policy adjustments at the end of this year when short-term inflationary risks – such as those caused by extra government spending due to coronavirus – abate.
(Reporting by Mariya Gordeyeva; writing by Olzhas Auyezov; editing by John Stonestreet)
