Central Bank of Azerbaijan increases discount rate

By Trend

The Board of the Central Bank of Azerbaijan (CBA) made a decision to increase the discount rate from 6.25 percent to 6.5 percent, Trend reports on Sept.17 referring to the CBA.

The upper limit of the interest rate corridor has also been increased by 0.25 percentage points – from 6.75 to 7 percent, and the lower limit - from 5.75 to 6 percent.

This decision was made on the basis of a forecast of short and medium-term inflationary factors, taking into account the influence of increasing inflationary processes in the world economy, in particular, the transfer to the national economy of rising prices for food and raw materials, transport and logistics costs, as well as the processes of liberalization of regulated prices and tariffs against the background of growth of balanced domestic demand.

"These factors weaken the neutralizing effect of monetary and fiscal policy, strengthening the role of inflationary factors in the balance of price stability risks. Preventing the deviation of inflation from the target in the forecast horizon causes the exit of monetary policy from the pause phase,” the CBA said in a statement.

Further decisions on the parameters of the interest rate corridor will be made considering changes in actual and forecast inflation indicators, the balance of risks, as well as the current state of the economy and its development prospects in the medium term.

The discount rate at the level of 6.25 percent has been maintained in Azerbaijan from December 18, 2020.