Central Bank announces inflation forecasts
By Sara Israfilbayova
The Central Bank of Azerbaijan (CBA) has reduced the discount rate by 0.25 percent (from 10 percent to 9.75 percent).
CBA Chairman Elman Rustamov made the remarks at a press conference on October 30.
The CBA also lowered the upper limit of the cap from 12 percent to 11.75 percent, and the lower limit of the floor from 8 percent to 7.75 percent.
“Further changes in the discount rate will depend on the compliance of the projected inflation with the target cap and floor,” Rustamov said.
As Rustamov noted, the new parameters of the discount rate cap and floor in the context of low inflation, along with the support of national currency fees, as well as the neutralization of other factors will serve as a signal for reducing discount rates on loans.
In 2018, the CBA had earlier reduced the discount rate in February from 15 to 13 percent, in April from 13 to 11 percent, in June from 11 to 10 percent and in August it remained unchanged.
The next discussion on the discount rate will take place at the end of December 2018.
He went on to say that the inflation in Azerbaijan can reach three to four percent by the end of the year, adding that in nine months of this year, the inflation in the country was at the level of 2.6 percent.
Rustamov stressed that inflation is forming below the target collar of six to eight percent.
The chairman of the CBA noted that in general there is a tendency to lower inflation. The factors that influence stabilization and reduction of inflation risks include favorable oil prices, a surplus in the balance of payments and the large amount of foreign exchange reserves. These factors also support stability in the foreign exchange market, he added.
Rustamov said that against the backdrop of lowering of the expectations of price increase in the sphere of trade and services, the business sector in Azerbaijan is waiting for lower inflation.
He also noted that change in the interest rate in the future will depend on conformity of the forecasted inflation to the announced target interval.
Speaking of currency reserves of the Bank, Rustamov noted that as of today, they make up $5.54 billion.
Further, he underlined that Azerbaijan’s currency reserves will continue to increase by year-end.
“As a result of the improvement of the indicators of the foreign sector, balance in the domestic currency market was preserved and currency reserves reached $45 billion. Positive tendencies in the foreign environment are expected to continue during the remaining part of 2018,” the chairman explained.
Touching upon the trade balance, Rustamov pointed out that in nine months of 2018, the surplus was 19 percent of the GDP.
He stressed that export of the non-oil goods in January-September 2018 increased by 13 percent compared to the same period of 2017.
Moreover, he emphasized that the sharp decline in exchange rates of Azerbaijan’s trading partners did not have a significant impact on the country's foreign trade balance.
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Sara Israfilbayova is AzerNews’ staff journalist, follow her on Twitter: @Sara_999Is
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