Azernews.Az

As Azerbaijan’s Central Bank prepares for its next rate-setting meeting on September 10, ING Group’s forecast that the refinancing rate will remain at 7% seems not only plausible but prudent. While inflation is cooling and economic growth remains tepid, the broader financial landscape suggests that now is not the time for aggressive monetary easing. Since the last rate cut in July, which lowered the refinancing rate from 7.25% to 7%, Azerbaijan’s inflation rate has dropped to 4.9% — well within the Central Bank’s target range of 4±2%. This is a welcome development, especially in a region where inflationary pressures have been notoriously difficult to tame. But inflation alone should not dictate monetary policy. The Central Bank must also weigh the risks posed by a narrowing trade surplus and an increasingly aggressive credit expansion. ING’s analysis rightly points out that GDP growth...

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