National Bank reduces refinancing rate from 7% to 6.5%

20:00, 2 April 2012

ASTANA. April 2. KAZINFORM In a further sign that the authorities were making continued efforts to further stimulate crediting and economic growth, Kazakhstan's National Bank has decided to set its key rate at 6.5 percent, the lowest rate ever, starting from April 2. This means the Bank will reduce it from the current 7 percent.

According to a statement released on March 29, the Board of the Bank has decided to make this change "given the current trends in the financial market and the slowdown of annual inflation."

Previously, the key rate was changed on February 14 this year, when it was reduced from 7.5 percent to 7 percent per annum. At a press conference that day, Chairman of the National Bank Grigory Marchenko said the key rate could be reduced even further in April if the inflation rate remained at the same level of 5.9 percent as of February 1, 2012, the Kazakh MFA's press service said.

As of March 1, the inflation stood at 4.7 percent, which is the lowest rate since 1999, Marchenko said recently. In 2011, the inflation rate equalled 7.4 percent, falling within the target corridor of 8.6 percent to 7.4 percent.

"The aim of the economic policy in the period ahead will be to ensure macroeconomic stability and economic growth at the planned level," Minister of Economic Development and Trade Bakhytzhan Sagintayev said on February 27. Given the global estimates, the average price of oil in the updated forecast for 2012 is set at U.S. $ 90 per barrel. "This price reflects the potential downside risks to the global economy," he said.

The economic policy of the Government and the National Bank for 2012, published in a joint statement on February 29, will ensure a real growth of gross domestic product (GDP) at an average 6-7 percent, which corresponds to providing a medium-term economic growth at 7 percent. The inflation rate will be maintained within 6 to 8 percent.

"At the moment, oil prices are at very good levels, and total gold and currency reserves amount to U.S. $ 83 billion (equivalent to 120 percent of the country's money supply), so in the near future Kazakhstan will be relatively safe, even if oil prices drop," a national economist Yuri Khramtsov shared his prognosis for 2012 in an interview with the an online Vlast magazine.

Wider economic data continue to point to a rather positive outlook for the country's economy this year. According to the Statistics Agency, foreign trade turnover in January 2012 amounted to U.S. $ 10.9 billion, including exports - U.S. $ 8.3 billion and imports - U.S. $ 2.7 billion, showing increase of 97.8 percent compared with January 2011.

The volume of investments in fixed capital in January - February 2012 amounted to KZT 457.2 billion, which is by 5.5 percent more than during the same period last year.

Industrial output in January - February this year amounted to KZT 2.6 trillion in current prices, which is by 2.8 percent greater than in January - February 2011.

The number of registered legal persons as of March 1 equalled 304,332 units, increasing by 5.3 percent compared to the corresponding period last year. The number of operating legal persons totalled 179,611, of which small firms account for 164,289 units. The number of registered small businesses in the country totalled 219,382 units and increased by 5.9 percent compared to the same period last year.

Average per capita nominal income in January totalled KZT 46,780. Compared to January 2011, the increase in nominal income equalled 18.1 percent, in real income by 11.5 percent.

Average monthly nominal wages, accrued to employees in January 2012, totalled KZT 92,191, which is by 19 percent greater than in January 2011.

National Bank of Kazakhstan Banks Economy