CBA reducing discount rate to limit future risks for Azerbaijan

According to forecasts of the Central Bank of Azerbaijan (CBA), the inflation rate in the next medium-term period will be in the target range (4%+/-2%), CBA Chairman Taleh Kazimov said during a discussion of state budget forecasts for 2024 at today’s meeting of the Parliamentary Committee on Economic Policy, Industry and Entrepreneurship, Report informs.

Kazimov emphasized that the medium-term period means two years: “The Central Bank considers the inflation rate not for every year, but for the medium-term period. On the other hand, in conditions of demand exceeding supply in the foreign exchange market, we are also easing monetary policy. According to our plan, by the end of this year the monetary base will increase by about 20%. This also creates sufficient risks in terms of macroeconomic stability in the future. Therefore, we are reducing the parameters of our discount rate to prevent consequences in the future.”

On November 1, by decision of the board of the Central Bank, the discount rate was reduced from 9% to 8.5%, the lower limit of the interest rate corridor from 7.5% to 7%, and the upper limit of the interest rate corridor from 10% to 9.5%.

The central bank forecasts annual inflation at 4.3% by the end of 2023, 5.3% in 2024 and 3.4% in 2025.