Azerbaijan’s Central Bank lowers discount rate to diminish future inflation risks

Chairman of Azerbaijan’s Central Bank (CBA) Taleh Kazimov has said the CBA forecasts the inflation rate in the next medium-term period to be in the target range (4%+/-2%).

He made the statement during the discussion of the forecasts of the state budget for 2024 at today's meeting of the Parliament’s Committee on Economic Policy, Industry and Entrepreneurship, according to Report.

Kazimov stressed that the medium-term period means two years: "The Central Bank considers the inflation rate not for each year, but for the medium-term period. On the other hand, given the excess of demand over 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 almost 20%. This also creates sufficient risks from the viewpoint of macroeconomic stability in the future. Therefore, we are lowering the parameters of our discount rate to prevent future consequences."

On November 1, by the 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%, the upper limit of the interest rate corridor - from 10% to 9.5%.

According to the forecasts of the Central Bank, annual inflation will be 4.3% by the end of 2023, 5.3% in 2024 and 3.4% in 2025.