ALMATY – Kazakhstan’s annual inflation slowed to 10.2% in July, extending its decline for a tenth consecutive month, while lending is increasingly shifting from consumer borrowing toward business financing, according to National Bank (NBK) Governor Timur Suleimenov’s report to President Kassym-Jomart Tokayev on Aug.
13. From L to R: Timur Suleimenov and President Kassym-Jomart Tokayev. Photo credit: Akorda. The figures point to a changing balance in Kazakhstan’s economy. Inflation is moving lower, and the NBK has already begun cautiously easing monetary policy, cutting the base rate to 16.75% in July.
At the same time, stronger investment activity and continued quasi-fiscal stimulus are supporting faster economic growth, creating a potential limit on how quickly borrowing costs can decline further. The National Bank’s next policy decision is scheduled for Sept.
4, when markets will be watching to see whether the regulator finds sufficient evidence that the slowdown in inflation is sustainable. Inflation slows, creating room for cautious easing According to Suleimenov, annual inflation declined to 10.2% in July. The slowdown follows a series of policy decisions that have gradually reduced the National Bank’s base rate.
The regulator kept the rate at 18% in April, lowered it to 17% in June and then reduced it by another 25 basis points to 16.75% on July 24. The latest reduction was significant because it marked a shift from maintaining restrictive conditions toward a cautious normalization of monetary policy.
However, the National Bank has stressed that the decline in inflation does not mean the inflation problem has been resolved. In its July decision, the regulator noted that some underlying components of price growth remained elevated and inflation expectations continued to pose risks.
The NBK therefore said that further decisions would depend on evidence that disinflation is sustainable, rather than on a predetermined path of rate cuts. The central bank expects inflation to remain between 9% and 11% in 2026, then slow to 5.5%-7.5% in 2027 and approach its 5% target in 2028.
The key contradiction: growth is helping the economy but complicating inflation policy One of the most important factors shaping the National Bank’s next steps is the strength of economic activity. According to the report, GDP growth reached 3% year-on-year in the first quarter of 2026, supported by stronger-than-expected investment activity.
Investment demand is expected to remain a major driver of growth, including through quasi-fiscal financing, subsidized loans, development institutions and guarantees supporting large projects. This creates a more complicated environment for monetary policy. Normally, lower inflation would provide a stronger argument for cutting interest rates.
But faster economic growth and continued investment stimulus can increase demand and liquidity, potentially adding new pressure to prices.