The Forecasting and Policy Analysis System (FPAS) at the National Bank of the Republic of Kazakhstan (NBRK) is a key analytical tool that supports monetary policy decision-making based on a comprehensive assessment of inflation and macroeconomic developments.
What is the Forecasting and Policy Analysis System?
The Forecasting and Policy Analysis System is a framework of models, analytical tools, and expert assessments used to produce macroeconomic forecasts and assess risks to price stability. The system makes it possible to:
- develop baseline and alternative scenarios for economic developments
- assess the impact of monetary policy decisions
- analyze transmission channels and risks
- support transparent communication of monetary policy decisions
How the Forecasting and Policy Analysis System Works
The Forecasting and Policy Analysis System is based on a structured and iterative forecasting process that integrates statistical data, external assumptions, and expert judgment into a single macroeconomic forecast. The system includes:
- a core macroeconomic model
- short-term forecasting tools
- satellite models for key areas
- risk analysis and alternative scenario analysis
Forecasting Rounds
Forecasting within the NBRK’s Forecasting and Policy Analysis System is conducted through regular forecasting rounds, which form the basis of the overall process. Each round includes:
Short-Term Forecasting
Short-term forecasting is aimed at assessing the current and near-term dynamics of key macroeconomic indicators, primarily inflation, GDP, and components of aggregate demand. The short-term forecast helps identify the current phase of the economic cycle, detect short-term inflationary shocks, and establish the initial conditions for the medium-term forecast. Short-term forecasting is based on:
- timely statistical data (high-frequency indicators and monthly statistics)
- survey results and business activity indices
- external assumptions (commodity prices, exchange rates, and macroeconomic conditions in partner countries)
- econometric and statistical models
Medium-Term Forecasting
Medium-term forecasting is one of the key elements of the Forecasting and Policy Analysis System and is aimed at developing a baseline scenario for economic developments over a horizon of up to two years. As part of the medium-term forecast, a consistent trajectory for returning inflation to its target level is developed, along with an assessment of the monetary policy response required to achieve this objective. Medium-term forecasting is conducted using the Quarterly Projection Model (QPM). The QPM is a semi-structural macroeconomic model that describes the dynamics of inflation and output through a system of behavioral equations and monetary policy transmission channels, taking into account economic agents’ expectations. The model comprises three main blocks:
- the Phillips curve
- the aggregate demand curve
- the monetary policy block
Research within the Forecasting and Policy Analysis System
As part of the Forecasting and Policy Analysis System, regular research is conducted to improve the quality of macroeconomic forecasts and develop analytical tools. Particular attention is paid to adapting forecasting models to structural changes in the economy and improving methodological approaches. This work includes reviewing and updating existing models, as well as their calibration and modernization in response to new data and changes in the economic environment. In addition, new models and tools are developed to improve the assessment of inflation dynamics, monetary policy transmission channels, and risks to price stability. The results of this research contribute to the development of the system’s modeling framework and are used in preparing macroeconomic forecasts and analytical materials.
Description of modeling techniques:
Short-Term Inflation Forecasting System
Short-Term GDP Forecasting System Using the Expenditure Approach
Short-Term GDP Forecasting System Using the Production Approach
