Kaza­khstan holds rates af­ter in­fla­tion surges to 6-year high

The Pak Banker - - FRONT PAGE -

AS­TANA: Kaza­khstan's cen­tral bank left its key in­ter­est rate un­changed as it looks to keep in­fla­tion in check af­ter the tenge sta­bi­lized. The base rate, set as the new bench­mark af­ter the cen­tral bank aban­doned its cur­rency peg in Au­gust, will re­main at 17 per­cent, pol­icy mak­ers said in a web­site state­ment on Mon­day. Three of six econ­o­mists fore­cast the move, with the rest pre­dict­ing cuts to 15 per­cent and 16 per­cent.

The de­ci­sion "was made tak­ing into ac­count risks for price sta­bil­ity, fi­nan­cial sta­bil­ity and the eco­nomic-growth out­look," the cen­tral bank said in the state­ment. "Keep­ing the base rate at the same level in the con­di­tions of an eco­nomic slow­down re­flects the ne­ces­sity of en­sur­ing de­mand for tenge as­sets."

Oil's worst down­turn in a gen­er­a­tion has taken a toll on Kaza­khstan, which holds par­lia­men­tary elec­tions this week, bring­ing the econ­omy to a near stand­still and send­ing its cur­rency to the world's se­cond-worst per­for­mance last year with a 50 per­cent loss against the dol­lar. In­fla­tion in Fe­bru­ary surged to 15.2 per­cent from a year ear­lier, the fastest since 2008.

The cen­tral bank also said it kept its rate cor­ri­dor at plus or mi­nus 2 per­cent­age points. The overnight de­posit and lend­ing stand­ing fa­cil­ity rates form a cor­ri­dor around the new bench­mark. Gov­er­nor Dani­yar Ak­i­shev re­sumed op­er­a­tions with lenders last month af­ter sus­pend­ing them in Novem­ber cit­ing a need to de­prive them of liq­uid­ity to spec­u­late against the tenge. That's helped bring money-mar­ket rates from a record 350 per­cent to an av­er­age of about 15 per­cent.

Among its post-Soviet peers, the tenge is the se­cond-best per­former against the dol­lar in the past month af­ter the Rus­sian ru­ble with a gain of 7.5 per­cent, ac­cord­ing to data com­piled by Bloomberg.

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