World countries switch to tight monetary policy

Baku. 26 January. REPORT.AZ/ Developing countries also started to introduce tight monetary regime after similar policy measures by developed countries. 

Experts group of Report News Agency says that most of developing countries tightened monetary policy by raising interest rates and reducing liquidity. These countries will keep on this policy upon need. Although this circumstances prevents devaluation of national currencies, it hampers the growth and boosts unemployment. As a result, economic activity drops, which in its turn can negatively affect global trade turnover.

Notably, although Central Bank of Turkey, which is one of main trade partners of Azerbaijan, didn’t raise interest rate in its meeting on January 24, it raised other interest bearing instruments. Beside this, it reduced liquidity volume of Turkish lira supplied to financial market. Other trade partner Russia, despite stabilization of national currency’s exchange rate, keeps interest at 10%.

Report’s expert group says developed countries apply tight monetary policy to prevent inflation in condition of fast economic growth and to slow down. Thus, United States administration increased interest rate to cool down employment market and to keep control over economic growth from the very beginning. We expect that during next 1-2 years this tendency will spread over economies with low interest rate like Eurozone, United Kingdom and Japan. This will further deteriorate already existing liquidity and investment problem and capital will flow out to developed countries. The process will probably continue next 10-12 years. Specifically, only short-term and portfolio investments will come to developing countries during this period.