Central Bank of Azerbaijan increases interest rate by 0.25%

Upon the decision of the Central Bank of Azerbaijan (CBA), the interest rate will be increased by 0.25% to 5.25% from May 6, 2011, the CBA reported on Friday.

The Central Bank also decided to increase the compulsory reserve requirements on domestic and foreign liabilities of banks from two to three percent

These decisions have been made as part of targeted measures of the CBA to preserve the price and financial stability in the country.

"Increase in food and energy prices have been observed in world markets over recent months. At the same time, there is a significant difference between countries and regions in the dynamics of economic growth and indicators of financial stability. In these circumstances, the flow of capital strengthens in the countries with sustained growth," said CBA.

In the current global economic situation, the growth in the economy of Azerbaijan continues, the rate of economic activity and production capacity increases. An increase is recorded in sources of monetary growth, the amount of surplus in balance of payments and foreign exchange reserves in the country.

"In these conditions, it is important to keep control over inflationary factors," said  CBA.

The decision to increase the interest rate is also aimed at strengthening the capacity of the Central Bank for the sterilization of excess money supply by providing appropriate conditions in financial markets.


/Trend/