Financial consultant Rasul Rysmambetov believes that the regulator faced an important choice: to keep the base rate at its current level or to raise it. In the context of economic uncertainty related to Trump's inauguration, potential tariff increases, and inflationary risks, the expert considers that the most optimal step would be to increase the rate by 0.25%.
— I think the National Bank aims to stay within the inflation corridor this year, trying to predict possible economic events, including reforms and the increase in utility tariffs, which has already occurred in January. Therefore, all of this needs to be restrained, — emphasized Rysmambetov.
Photo: Kazinform/ Freepik
He also discussed the impact of tariff increases on inflation and the economy as a whole. If the increase in tariffs, such as for heating and electricity, is moderate, it may contribute to enhancing investment attractiveness, creating incentives for the construction of new facilities, such as CHPPs or refineries, if energy prices are closer to market levels. However, in his opinion, it is necessary to find the right balance so as not to harm the population.
— The National Bank has taken a neutral position in this case, but further decisions will depend on how events develop, — he summarized, adding that clarity can be expected at the next meeting of the monetary committee.
Economist Askar Kysykov stated that the base rate, despite its role in combating inflation, is not always an effective tool. According to him, since the transition to an inflation targeting regime in 2015, the main mandate of the National Bank has been price stability. However, in practice, the base rate does not always restrain inflation.
— Over the years, we see that the base rate does not actually help to restrain inflation. There have been times when the rate was high, but inflation remained at a high level. Therefore, the influence of the base rate on inflation is limited. Firstly, the interest rate channel does not work effectively, as a significant share of lending consists of consumer loans, which respond weakly to changes in the rate. For example, banks issue loans at 30-50%, and such loans are inelastic to changes in the base rate, — says the economist.
Photo: Kazinform
He also emphasized that under current conditions, the base rate mainly influences the deposit base. A high rate encourages citizens to keep money in deposits, which improves the liquidity of second-tier banks. These banks, in turn, place their funds in the National Bank, earning high returns. Thus, the base rate becomes a tool that helps the financial sector maintain liquidity and avoid participating in currency operations, thereby preventing fluctuations in the exchange rate of the tenge.
— Our base rate has become a tool not for fighting inflation, but more for supporting the exchange rate, — believes Askar Kysykov.
The expert noted that inflation in Kazakhstan last year was 8.6%, with services, primarily tariffs, contributing the most to the price increase. Tariffs for water supply, electricity, and heating increased by 20-30%, which became the main factor of inflation.
Photo: KREM MNE RK
— The base rate does not affect tariffs in any way. This year we expect further tariff increases, as well as an increase in fuel prices. Regardless of any base rate values, inflation will rise, — emphasized Askar Kysykov.
The speaker suggested that in March, the National Bank may decide to raise the base rate.