What changed and the signal
Kazakhstan's central bank lowered its policy rate to 15.75% on Friday, extending a four-meeting easing run. In a Bloomberg survey, three economists expected a half-point cut while four forecast a quarter-point move.
"The ongoing decline in annual inflation and inflation expectations has created room for a reduction in the base rate," the Astana-based bank said, while warning that "price pressure remains elevated, and the balance of risks is skewed towards a pro-inflationary stance." Following July's unexpected reduction, Governor Timur Suleimenov said additional easing could occur if inflation moved into the 9% to 9.5% band. September landed at 9.3%.
Officials also noted annual inflation could firm toward year end because of the low 2025 base for regulated tariffs. They also lowered expectations for near-term moves, indicating a further cut this year is improbable and that the "probability of a change in the base rate by the end of 2026 remains low." Any future cut, they added, would require confirmation that price pressures are steadily weakening.
Prices, currency, and the external backdrop
So far this year, the tenge is up more than 12% versus the dollar, ranking as the world's third-best performer, which has helped restrain imported inflation. Firmer oil prices also pushed the current account to a $2.4 billion surplus in the first half, the first time in three years it has been in the black.
That stronger currency has cooled foreign investor appetite, and they indicated a readiness to offload additional dollars if the tenge slips from current levels, Deputy Governor Aliya Moldabekova told Bloomberg News this month. These conditions prompted the central bank to postpone its plan to sell up to $300 million per month from the national oil fund, citing "excess foreign-currency supply."
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Fiscal outlook and what is next
On Oct. 13, Deputy Prime Minister Serik Zhumangarin addressed the cabinet, saying the government will keep working with the central bank to fight inflation and lift real incomes. The following day, he told parliament the administration expects inflation to be in a 7.5% to 9.5% range next year.
He said the economy grew 4.2% in the first nine months, and is projected to average more than 5% annual growth in 2027 to 2029. Bigger withdrawals from the oil fund should help, rising to 4.4 trillion tenge in 2027 from 2.77 trillion this year after the decision to resume additional budget transfers for social and other infrastructure.
Regional council elections are scheduled in Kazakhstan for Nov. 29, the final stage of the political overhaul launched by President Kassym-Jomart Tokayev after deadly 2022 riots sparked by higher fuel prices. Since a cap introduced last October was lifted on April 1, fuel and utilities prices have been climbing gradually.
The central bank meets next on Dec. 4. It set its rates corridor at plus or minus one percentage point around the benchmark.
Why it matters for investors
The bank is trimming because inflation has cooled, but it is signaling patience from here. A strong tenge, a current account in surplus, and higher oil prices support the backdrop, while delaying oil fund FX sales reduces official dollar supply near term. The bottom line: a steady policy hand, a firm currency unless oil weakens, and fiscal support stepping up into 2027.
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