CBA: Maneuvering capacity exists for management of external and internal risks

Baku. 29 December. REPORT.AZ/ The external and internal risks are in the focus of attention of Azerbaijani government and Central Bank of Azerbaijan (CBA) , macroeconomic maneuvering capacity exists for their management.

Report informs referring to the CBA statement on priorities of monetary policy for 2018 and midterm period.

It says, next year Financial Stability Board will closely coordinate the macroeconomic policy decisions.

“A number of external and internal factors may create problems to achieve the targets of macroeconomic stability. First of all, it includes the predicted considerable low price of oil in the world and worsening the figures of balance of payments as a result of decline of economic activity in economic partner countries. The continuation of rise of global food prices may be the reason of additional imported inflation. High and non-symmetrical inflation and rate expectation (i.e. sharp reaction of economic actors to devaluation of national currency and inflation) also forming of fiscal deficit may impact on macroeconomic stability,” the statement reads.

According to the Central Bank, new macroeconomic stability framework had been formed, the external and internal balance of the country started to improve in 2017 as a result of implementation of adequate policy measures in response to external shock.

Moreover, the effective communication will be in focus of the CBA to ensure forming of adequate expectations by economic actors, to create condition for making rational economic decisions and to increase the trust to monetary policy.

The CBA will continue to take measures to increase its analyzing and forecasting capacity as one of the important conditions for switching to inflation targeting regime.

"Switching to the introduction of medium-term expenditure framework, strengthening the financial discipline at large state companies and application of corporate management standards will be continued,” statement reads.