FX.co ★ Central Bank of Kazakhstan Lowers Interest Rate

The Central Bank of Kazakhstan cut its key policy rate by 100 basis points to 17% at its June 2026 meeting, delivering the first reduction in borrowing costs since mid-2024 and surprising markets that had largely expected no change. Policymakers noted that inflation continued to slow, easing to 10.4% in May. Reflecting this trend, the central bank lowered its 2026 inflation forecast to 9–11% from 9.5–11.5%, citing a faster-than-anticipated deceleration in price growth, the limited pass-through of the VAT increase to consumer prices, and the appreciation of the tenge. Inflation is now expected to decline further to 5.5–7.5% in 2027 and to converge to the central bank’s 5% target in 2028. At the same time, the GDP growth forecast for 2026 was revised up to 4.5–5.5%. Despite the rate cut, policymakers stressed that monetary conditions will need to remain moderately restrictive to ensure inflation falls into single digits this year and returns to the medium-term target.