Fresh anti-inflation measures unveiled in Kazakhstan for the banking sector
Kazakhstan's Central Bank Increases Minimum Reserve Requirements
The National Bank of Kazakhstan has announced an increase in minimum reserve requirements (MRR) for banks operating within the country, marking a significant move to curb inflation and bolster the effectiveness of its monetary policy.
The changes, effective from August 12, 2025, will see the MRR levels for banks increased as follows:
- For tenge obligations, the MRR will be raised to 3.5%.
- For foreign currency obligations, the MRR will be increased to 10% for second-tier banks, and 15% for other banks.
These changes will be implemented over the course of a year, providing banks with sufficient time to adjust their operations.
The aim of this policy is twofold: to reduce the excessive growth of monetary aggregates (the amount of money circulating in the economy) and to improve the transmission of monetary policy, helping to stabilize the financial system.
As a result, banks must hold a larger portion of their deposits as reserves with the central bank, limiting the amount available for lending. This action can slow down credit expansion and inflationary pressures by reducing liquidity in the banking system.
The National Bank Chairman of Kazakhstan, Timur Suleimenov, has reiterated his commitment to maintaining a 5% inflation rate, and the new MRR levels are expected to contribute to this goal.
It's worth noting that prior to these changes, the MRR levels in Kazakhstan were the lowest in the region, at 1.3% for tenge obligations and 2.5% for foreign currency obligations. In comparison, the average MRR level for national currency obligations in countries like the EAEU, Central Asia, and the Caucasus is 4-4.5%, while for foreign currency obligations, it's around 15%.
To provide a 'safety cushion' for banks, the National Bank of Kazakhstan has approved a regulation on minimum reserve requirements. This move is expected to strengthen the central bank's control over money supply and help maintain financial stability in the country.
In summary, the central bank's increase in minimum reserve requirements aims to restrain monetary growth and enhance monetary policy efficacy, likely resulting in tighter bank lending and more stable financial conditions in Kazakhstan in the near term.
Banks in Kazakhstan will need to hold a larger portion of their deposits as reserves with the central bank due to the increased minimum reserve requirements (MRR), which will be effective from August 12, 2025. This change in finance policy is aimed at reducing excessive growth of monetary aggregates and improving the transmission of monetary policy, thereby contributing to maintaining a 5% inflation rate as stated by the National Bank Chairman of Kazakhstan, Timur Suleimenov.
