By Sara Rajabova
The Kazakh government has worked on series of measures to counteract the negative effects which dropping oil prices and a struggling Russian economy have had on its national economy. In order to prevent a sharp rise in inflation the government decided to intervene and get the trend under control.
Oleg Smolyakov, Deputy Chairman of the National Bank of Kazakhstan said Kazakhstan will implement a new monetary policy in view of controlling inflation in the country, Kazakh media reported.
“At present, the regulator is working on transitioning to the new monetary policy, related to the implementation of inflation targeting principles. We will expand the instruments of monetary policy to regulate banks' short-term liquidity as part of this transition in 2015.At the same time, the National Bank will focus on improving the efficiency of interest rate policy to achieve the inflation target,” Smolyakov told reporters on February 26.
Kazakhstan annual inflation rate stood at 7.4 percent at the end of 2014 and 4.8 percent in 2013, as registered by the National Bank.
In addition, Kazakhstan plans to change the mechanism of its banks' minimum reserve requirements in order to improve the attractiveness of savings and liabilities denominated in tenge under the policy of de-dollarization.
Smolyakov also said the National Bank, depending on the implementation of scenario options for the development of the economy will maintain a balance between monetary policy's primary objectives on price stability and the promotion of its financial system stability.
Kazakh media previously reported that the National Bank of Kazakhstan intends to move to a policy of inflation targeting in the medium term.
“Inflation is an immediate priority and in the medium term we will implement a series of measures which will aim to get this under control. This approach has been favored by other countries in the region as they face similar difficulties," said Kairat Kelimbetov, Kazakhstan’s chief banker.
He added that over the next three years a net improvement in macroeconomics should take place.