September 9, 2019 / 9:46 AM / 2 months ago

UPDATE 2-Kazakh central bank raises key rate to offset extra spending

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ALMATY, Sept 9 (Reuters) - Kazakhstan’s central bank raised its key interest rate to 9.25% from 9.00% on Monday, citing inflationary pressure from domestic demand boosted by extra spending.

The tenge strengthened about 0.1% after the rate increase, which came despite President Kassym-Jomart Tokayev’s criticism of monetary policy last week. Tokayev said the economy lacked access to cheap credit.

The central bank said further moves would depend on consumer prices, domestic demand, import growth and global economic conditions. It will next review the rate on Oct. 28.

“We hope today’s decision will allow us to ease the pressure on the market ... ensuring that inflation is within the target range,” Yerbolat Dosayev, the central bank’s chairman, told a briefing.

Annual inflation rose to 5.5% in August from 5.4% in July. The bank aims to keep it within 6.0% this year.

Inflation began accelerating as the government raised salaries of its workers during the political transition to Tokayev from veteran leader Nursultan Nazarbayev.

In a Reuters poll last week, four out of nine analysts predicted the central bank would raise the rate, four expected no change and one forecast a cut. (Reporting by Mariya Gordeyeva; writing by Olzhas Auyezov; editing by Larry King)

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