Kazakhstan Central Bank Chief Sees No Pressure on Tenge After Rate Cut

Kazakhstan’s central bank governor has sought to calm concerns over the tenge after the National Bank cut its base rate for the first time since October 2025, saying demand for local-currency assets should remain stable despite lower returns. The National Bank of Kazakhstan lowered its base rate to 17% from 18% on June 5, citing slowing inflation and an improved economic outlook. The decision was based on updated assessments of inflation risks and key macroeconomic indicators, the bank said. Annual inflation slowed to 10.4% in May from a peak of 12.9% recorded in September last year. The central bank also raised its oil price assumption for the remainder of 2026 to $90 per barrel for Brent crude. National Bank Governor Timur Suleimenov said the rate cut would lower returns on tenge-denominated deposits but would not trigger a significant shift into foreign-currency assets. “Interest rates on tenge deposits remain substantially higher than returns on foreign-currency deposits,” Suleimenov told reporters. “A one-percentage-point reduction will not fundamentally change the attractiveness of deposits or other tenge-denominated assets such as corporate bonds and government securities.” Suleimenov said demand for local-currency assets is expected to remain stable, limiting pressure on the exchange rate. He acknowledged that the tenge could face seasonal pressure during the summer because of increased demand for foreign currency linked to overseas travel and dividend payments by Kazakhstani companies listed on international exchanges. However, he said Kazakhstan’s economic fundamentals remain supportive of the national currency. “Oil prices are rising, while metal prices have increased by an average of around 17%, with some commodities gaining as much as 40%,” Suleimenov said. “If there are no major external shocks, I see no reason for any significant weakening of the tenge.” The central bank also revised its inflation forecast for 2026 downward to a range of 9%-11%, compared with a previous estimate of 9.5%-11.5%. Its inflation forecast for 2027 remains unchanged at 5.5%-7.5%. Suleimenov said the bank expects inflation to approach its long-term target of 5% by 2028 as external inflationary pressures ease and government and central bank measures take effect. “The slowdown in inflation during April and May gave us room to lower the base rate,” he said. “But it would be premature to say inflation has been defeated. Future decisions will depend on incoming data and our assessment of risks.” The official exchange rate stood at 487.4 tenge per U.S. dollar on June 7. The outlook remains cautious. As previously reported by The Times of Central Asia, S&P Global Ratings forecast that the tenge would average around 540 per dollar in 2026, reflecting expectations of a weaker currency over the medium term.