* Government retains 6-8 pct inflation forecast
* Inflation below 6 pct could prompt rate cut
* Higher wheat prices could spur inflation
By Olga Orininskaya
ALMATY, Aug 11 (Reuters) - Kazakhstan may consider lowering its refinancing rate from 7.0 percent should full-year inflation come in at below 6.0 percent, the lower end of the government’s current forecast, the central bank’s head said on Wednesday.
Grigory Marchenko said any increase in wheat prices ran the risk of accelerating inflation, although there has been little sign to date that Russia’s worst heatwave on record is having a knock-on effect on food prices in Kazakhstan. “There’s no message of a second wave of crisis,” Marchenko told reporters, adding that Kazakhstan’s financial markets were stable after a decline last year when Central Asia’s largest economy briefly dipped into its first recession in a decade.
Kazakhstan’s refinancing rate began 2009 at 10.0 percent before being lowered several times to help the country cope with the effects of the financial crisis. The most recent cut occurred in September 2009, to 7.0 percent from 7.5 percent. “We think inflation this year will fall within the corridor that we stated previously: 6 to 8 percent,” Marchenko said.
Consumer prices rose 4.6 percent between Jan. 1 and July 31 and 12-month inflation at the end of July was 6.7 percent.
Marchenko said that, in theory, any increase in wheat prices ran the risk of accelerating inflation.
World wheat prices rose to two-year highs this month as Russia announced an export ban, but they are far below the peaks set in early 2008, when shrinking inventories and rising energy markets helped push CBOT wheat futures to $13.34-1/2 per bushel.
“If (wheat) prices, theoretically, were to rise to such an extent that they were no longer $260 (per tonne) but $380, then naturally I cannot guarantee this would not have any effect on inflation in 2010 and 2011,” Marchenko said.
President Nursultan Nazarbayev said on Aug. 5 that Kazakhstan, despite drought in western regions, would harvest an average grain crop this year and that the country would have sufficient wheat to feed itself, with a surplus left over.
The government forecasts a crop of 13.5 million tonnes, 35 percent below the record haul of 2009, but close to the average of the last few years. Kazakhstan’s three main grain regions, accounting for 80 percent of output, have escaped the drought. (Writing by Robin Paxton; Editing by Ruth Pitchford)