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Kazakhstan’s central bank resumed interest-rate hikes at its first meeting since deadly fuel-price riots rocked Central Asia’s biggest energy exporter at the start of the year.
The National Bank increased the key rate to 10.25% from 9.75%, it said in a statement Monday.
“The decision was taken based on the need to reduce inflationary expectations and to move the inflation rate into the targeted corridor of 4%-6% by the end of 2022,” the central bank said. The “tragic events” at the start of January may have spurred the pace of price growth, the central bank said, adding that inflation may end the year at a rate of 6% to 6.5%.
Protests against high motor-fuel prices erupted into nationwide riots that took hundreds of lives and led President Kassym-Jomart Tokayev bring in Russia-led troops. Tokayev ordered Kazakhstan’s 8.4% inflation rate halved by 2025, while his new prime minister demanded a raft of price measures -- including a six-month fuel-price freeze and a ban on potato and carrot exports.
As the fighting subsided and trading resumed, the central bank was forced to burn through the equivalent of $240m million to defend the Kazakh currency on Jan. 12 and 13.
According to the statement, the central bank’s rates corridor, formed from the overnight deposit and lending rates, was kept at plus or minus one percentage point around the benchmark.
The next key rate decision is scheduled for March 9, according to the statement.
- Tokayev also plans to raise taxes on mining companies and called for gasoline producers to pay higher excise duties without passing on price increases to consumers
- Foreign holdings of central bank tenge notes fell to 130 billion tenge ($299 million) as of Jan. 14, compared with 211.3 billion tenge at the end of last year, the central bank said
- The central bank spent $252 million on currency interventions in December, while the national oil fund and state-run companies sold $839 million and $334 million, respectively
- The state pension fund, run by the central bank, transferred 2.5 trillion tenge to customers last year in a bid to boost living conditions
(Adds FX sales by state-run companies in December in 10th paragraph)
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