National Bank Head Says Inflation Driven by Excess Money in Economy

National Bank Chair Timur Suleimenov said that the current inflation in Kazakhstan is caused by an oversupply of money in the economy, Orda.kz reports.

In our view, inflation is driven by the fact that we have too much money. Our monetary aggregates are growing and have grown by about 18%. They were showing some decline, but are now showing an increase. A lot of money is being injected into the economy. There are two sources: large fiscal injections and consumer lending, Suleimenov stated in the Majilis.

He explained that demand is growing faster than the country can produce goods and services. When demand is high but supply is limited, prices rise. If the shortage is covered by imports, the national currency weakens against the dollar.

As a result, the base rate has been raised to 18% to discourage excessive spending. The National Bank also plans to restrict the amount of money in circulation.

Original Author: Ilya Astakhov