CBA: Interest rate decisions are not based solely on inflation trends

The fixed exchange rate regime is the main anchor of the monetary policy of the Central Bank of Azerbaijan (CBA), CBA Governor Taleh Kazimov told a press conference held today, Report informs.

"When making decisions on the key interest rate, we take into account expectations for the next three months. Of course, we consider current inflation, but our main focus is on what level inflation will reach in the medium term. Our forecasts show that in the medium term, meaning over the next two years, inflation will remain within the target range. We also take into account short-term inflation processes. However, our main focus is on the medium-term outlook. The main goal of our monetary policy is to ensure price stability. The main anchor of our monetary policy is the fixed exchange rate regime. The key interest rate is a tool that supports this policy," he said.

"We believe that through the fixed exchange rate regime, we can achieve our main goal - price stability. Therefore, we primarily monitor developments in the foreign exchange market while also taking into account medium-term inflation expectations. That is why it would be incorrect to say that if inflation were 7% or 6.2%, we would change the key interest rate accordingly. This is a wrong approach. Decisions on the key interest rate are made by taking into account a combination of several different factors," Kazimov noted.