National Bank Explains Why Kazakhstanis Are Bracing for Higher Prices

Constant news about higher tariffs, a VAT increase and a weaker tenge is pushing Kazakhstanis’ inflation expectations above the actual inflation rate, National Bank Chairman Timur Suleimenov said, Orda.kz reports.

Annual inflation stands at 10.3%, while the public expects prices to rise by 13.4%, according to Suleimenov.

He explained that inflation expectations influence how people spend, save and invest. The National Bank therefore considers not only current inflation but also how quickly people expect prices to rise in the future.

If the news constantly talks about rising tariffs and a VAT increase, or reports that the tenge has weakened and the dollar has risen, people begin to expect higher inflation, regardless of the actual rate. We would like the gap between actual inflation and expectations to narrow, but that is difficult to achieve. This is why we cannot lower the base rate quickly, even when inflation has already slowed,Suleimenov said.

He added that the media plays an important role in shaping how people perceive price increases. The regulator is trying to explain its decisions more clearly so that the public understands its policies.

The National Bank lowered the base rate on Friday.

What Else the National Bank Chairman Said

• Large cryptocurrency miners may be required to transfer part of their mined digital assets to the state. The assets would ultimately be managed by the National Investment Corporation of the National Bank.
• Lowering the base rate will not immediately make market-rate mortgages cheaper because banks need time to revise their lending terms.
• Suleimenov advised Kazakhstanis to study the performance of private investment managers carefully before transferring their pension savings.

Read also:

• Billions Sent Abroad: Where Kazakhstan’s Money Transfers Go
• How Much Do Kazakhstan’s Banks Charge Businesses for QR Payments?
• Fuel Smuggling Attempts Rise Amid Regional Shortages