The Central Bank of Kazakhstan lowered its key policy rate by 100bps to 17% at its June 2026 meeting, marking the first reduction in borrowing costs since mid-2024 and surprising markets, which had broadly expected rates to remain unchanged. Policymakers noted that inflation continued to ease, slowing to 10.4% in May. The central bank revised its 2026 inflation forecast downward to 9–11% from 9.5–11.5%, due to a faster-than-expected deceleration in price growth, the limited pass-through of the VAT increase to consumer prices, and the appreciation of the tenge. Inflation is now projected to slow further to 5.5–7.5% in 2027 and converge to the central bank's 5% target in 2028. Meanwhile, the GDP growth forecast for 2026 was upgraded to 4.5–5.5%. Despite the rate cut, policymakers emphasized that monetary conditions must remain moderately restrictive to ensure inflation falls into single digits this year and returns to the medium-term target