All analysts polled by Reuters had said they expected the rate to remain unchanged. The bank hiked the rate sharply a year ago as the Kazakh tenge sank together with the Russian rouble as a result of the Russian invasion of Ukraine, which plunged regional economies into uncertainty. Annual inflation reached 20.7% in January, a level not seen in the Central Asian nation since the 1990s, due to the disruption of many supply chains because of the war and subsequent Western sanctions against Moscow. Former Soviet overlord Russia is one of Kazakhstan's biggest trading partners and Astana relies on it for the transit of oil, Kazakhstan's key export, to European markets. The war has forced some Kazakh companies to sever ties with Russian partners hit by sanctions, and set up new, usually more expensive, shipping routes. Some large Western companies, such as McDonald's, have left the local market, citing difficulties with supplies. "Geopolitical instability and high food prices remain the main pro-inflation factors in the external environment," central bank governor Galymzhan Pirmatov told a briefing. "...Inflation risks are linked to the possible acceleration of monthly inflation in Russia against the backdrop of growing budget spending, weakening rouble and sanctions." Kazakhstan's economy grew 3.1% last year instead of the strong 4% post-COVID recovery forecast before the war. Oil exports through the Caspian Pipeline Consortium suffered from an unusual number of disruptions last year, while those through the Russian pipeline system have become less profitable, according to Reuters data. The war has had a similar effect on other Central Asian economies, although some countries which rely heavily on remittances from migrant labourers benefited from a stronger rouble last year when Russia introduced capital controls. (Reporting by Mariya Gordeyeva, Writing by Olzhas Auyezov; Editing by Himani Sarkar and Sharon Singleton)
Messaging: olzhas.auyezov.thomsonreuters.com@reuters.net)) (Adds details)
ALMATY, Feb 24 (Reuters) - Kazakhstan's central bank
kept its policy rate unchanged at 16.75% on Friday and said it
was unlikely to make cuts in the first half of this year as it
sought to stabilise inflation which surged amid the
Russia-Ukraine war.
The bank said it expected consumer prices to rise 9% to 12%
this year with the economy growing 3.5% to 4.5%.
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