The National Bank of Kazakhstan believes inflation will remain within its target of 6% to 8% this year and next regardless of whether the Brent crude price averages $50 or $60 per barrel.
It crunched the numbers on the two different scenarios, finding the lower prices would lead to a lower real GDP growth rate – 1.5% compared with 2% – but would have a relatively small impact on other elements of the economy.
Annual CPI inflation has hovered around 7.5% the past five months, after rising steadily through 2014, something the central bank attributes to the devaluation of the tenge.
The central bank has not released specific forecasts, but appears confident it will remain around the current level for the next two years, on account of the "short-lived and limited" impact of the devaluation.
These observations appeared in a document outlining the "main directions" for monetary policy in 2015, published today, which notes the central bank is planning to expand the range of instruments it uses to manage short-term liquidity.
"[The] National Bank [plans] to focus efforts on improving the efficiency of the interest rate policy by keeping market rates and their volatility in the acceptable range," it said.
In the final quarter of 2014 the volatility of market rates in Kazakhstan increased as expectations of a further devaluation increased, on the back of falling oil prices and the falling Russian ruble. "Under these conditions, the National Bank provides short-term tenge liquidity through reverse repo operations and foreign exchange swaps," it noted.
Pakistan is also weighing a change in its monetary policy framework with an eye on reducing volatility, by introducing a new 'target rate' to help anchor the overnight repo rate in the money market.