Azerbaijani Central Bank keeps discount rate unchanged

By Azernews

By Abdul Kerimkhanov

The Central Bank of Azerbaijan (CBA) has kept the discount rate at 9.75 percent, CBA reported on December 26.

The upper limit of the interest rate corridor remained at the level of 11.75 percent, the lower limit of the interest rate corridor remained at the level of 7.75 percent.

The decision made by the board of the bank comes into force from 14:00 on December 26.

According to the CBA, the preservation of the corridor parameters is due to the uncertainty in foreign markets. In the future, the reaction of monetary policy will depend on the dynamics and sustainability of inflation factors.

The Central Bank notes that economic activity in Azerbaijan maintains a positive trend and is approaching its potential level. The economic growth in January-November 2018 was one percent, including 1.4 percent in the non-oil sector.

The growth of the non-oil sector is mainly due to trade activity. Non-oil industry grew by 8.7 percent, agriculture - by 4.6 percent.

The business confidence index, calculated on the basis of monitoring of the real sector, is growing in non-oil refining, trade and services, but has fallen in the construction sector.

As for households, surveys show that consumer confidence is in a positive zone.

The main factors supporting the growth of consumption are the increase in real incomes of the population in conditions of low inflation and the recovery of consumer lending.

Next year, the CBA plans to consider a change in the discount rate eight times - February 1, March 15, April 26, June 7, July 26, September 13, October 25, December 13.

This year, the CBA reduced the discount rate in February from 15 to 13 percent, in April from 13 to 11 percent, in June from 11 to 10 percent, in August it remained unchanged, and in October from ten to 9.75 percent.

The National Bank of the Republic of Azerbaijan was established by Decree of President of Azerbaijan on Establishment of the National Bank of the Republic of Azerbaijan dated 11 February 1992. The National Bank of the Republic of Azerbaijan was renamed as ‘The Central Bank of the Republic of Azerbaijan’ due to entry into legal force of the Referendum Act of the Republic of Azerbaijan dated 18 March 2009 on ‘Making additions and amendments to the Constitution of the Republic of Azerbaijan’.

Profit making is not the main goal of the Central Bank.

The main goal of the Central Bank is to maintain price stability within its authorities set by the Law.

The Central Bank’s goals also include to organize and ensure operations of centralized interbank and other unlicensed payment systems, as well as support the stability of the banking system.

The Central Bank is independent in a discharge of its responsibilities and exercise of its authorities prescribed by the Constitution and laws of the Republic of Azerbaijan, and no public authority or self-administration body, individuals or legal entities may directly or indirectly for whatever reason contain, illegally influence or interfere with its activities.