The National Bank of Kazakhstan cut the base rate by 50 basis points to 9%. Central Asia’s biggest energy producer became one of just a handful of countries in the world this month to reinstate full coronavirus isolation restrictions. The four-week-long lockdown has put a fresh strain on the economy, which was already heading for its first annual contraction in more than two decades.
Weakening of pro-inflationary risks and a stronger contraction in economic activity resulted in the cut in rates. The measures taken to tighten quarantine will have an additional disinflationary effect.
Central bank’s rates corridor, formed from the overnight deposit and lending rates, was narrowed to plus or minus 1.5 percentage points around the benchmark. The move was made possible by a stabilization of financial markets and the adaptation of the economy to new conditions, the bank said.