Empirical Analysis of Monetary Policy and Structural Dynamics of Inflation. Case study in Kazakhstan

Abstract

The study utilizes vector autoregressive (VAR) models to explore the effectiveness of monetary policy tools, such as interest rates and inflation targeting, in managing the economic volatility associated with Kazakhstan's reliance on oil exports and its exposure to global economic shocks. The findings reveal that the National Bank of Kazakhstan (NBK) has effectively used monetary policy to mitigate inflationary pressures, despite the complex challenges posed by external economic shocks, including fluctuations in oil prices and geopolitical tensions. The delayed but significant exchange rate pass-through (ERPT) to consumer prices underscores the efficacy of the NBK's strategic adjustments in response to external and domestic economic disturbances. Structural vulnerabilities, highlighted by the economy's sensitivity to external shocks, stress the importance of ongoing reforms aimed at economic diversification and strengthening the financial sector. The research suggests that enhancements in the financial infrastructure have gradually improved the stability and responsiveness of the monetary policy framework