Central Bank of Azerbaijan raises interest rate

The Board of the Central Bank of Azerbaijan (CBA) made a decision to increase the interest rate from 7 to 7.25 percent, News.Az reports citing the CBA. 

The upper limit of the interest rate band increased from 8 percent to 8.25 percent, while the lower limit remained unchanged and reached six percent, the central bank said. 

Inflationary pressure has been increasing recently due to external factors that play a decisive role in the formation of prices.

“Rising global commodity prices and inflation in trading partner countries, the impact of supply chain disruptions and an increase in transportation costs are bigger than expected,” the CBA said. “The influence of factors of domestic expenditures, especially the liberalization of state prices, is being made on the inflation rate. These factors make it difficult to link the inflation rate to the target level due to higher price expectations.”

According to the CBA, the role of monetary factors in the formation of inflation dynamics is insignificant.

“The balance in the foreign exchange market strengthens the main anchor of price stability and greatly neutralizes external inflation,” it added. “The decisions to tighten monetary conditions increase the counterbalancing influence of monetary factors on the inflation rate.”

The CBA stressed that the following decisions on the parameters of the interest rate corridor will be made taking into account the changes in the balance of inflation risks and economic prospects in the medium term.


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