(Bloomberg) -- Kazakhstan kept borrowing costs unchanged for the second time this year and signaled it will hold them there for the first half of 2023 as it revised down its forecast for annual inflation.

The National Bank held its key interest rate at 16.75% on Friday, leaving it within a quarter-percentage point of the highest ever, matching the expectations of all economists surveyed by Bloomberg. Inflation is now projected to be within a range of 9%-12% in 2023, from a previous forecast of 11%-13%, falling to 6%-8% next year and to 4%-6% in 2025, the bank said in a statement.

“The forecast range has been expanded due to uncertainty about fiscal stimulus in Kazakhstan and inflation dynamics in Russia,” the bank said in the statement. “Under these conditions, maintaining the base rate in the first half of 2023 at current values will help stabilize inflation and gradually reduce it in the medium term.”

The government is selling vegetables from state stockpiles after banning onion exports in late January in an attempt to cool food prices, which pushed inflation to an annual 20.7% last month, the fastest in more than a quarter century.

Prime Minister Alikhan Smailov reiterated on Feb. 14 the government is seeking to cut inflation to 9.5%, while ordering regional authorities to “take special attention to stabilize prices on socially important goods.” Analysts surveyed by the central bank earlier in February forecast inflation at 11.8% this year and average key rate at 15.5%. 

Russia, whose invasion of Ukraine a year ago spurred a global inflation spike, is Kazakhstan’s largest trading partner and its main source of imports.

Foreign currency sales by state-run companies and Kazakhstan’s oil fund fell to $681 million in January from $790 million in December. The central bank bought $120 million for the unified pension fund, while avoiding interventions in the foreign-exchange market. 

The tenge has strengthened about 3% against the dollar since the last rate decision in January.

The central bank said its rates corridor, formed from the overnight deposit and lending rates, was kept at plus or minus one percentage point around the benchmark. The next rate decision is scheduled for April 7.

--With assistance from Joel Rinneby.

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