Azerbaijan gradually eliminating impact of aggregate demand and economic activity on inflation

19 March 2021 16:55 (UTC+04:00)

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No noticeable changes have been observed in the balance of inflation risks since the recent meeting of the Board of the Central Bank of Azerbaijan (CBA), Trend reports on March 19 with reference to the CBA.

“In the mid-term forecast, factors that have a downward and upward impact on inflation continue to balance each other,” the bank said.

The bank stressed that the improvement in the international situation, in particular, the upward trend in oil prices, maintains currency stability.

The restrictive influence of aggregate demand and economic activity on inflation is gradually being removed. Such factors as the trend of rising prices in the world food market and administrative regulation of prices exert an increasing influence on inflation.

“Further decisions on the parameters of the interest rate band will be made taking into account the actual and projected inflation, the dynamics of core inflation and the processes of economic recovery,” the Central Bank of Azerbaijan said. “Depending on the macroeconomic situation, the possibility of continuing the process of easing monetary policy will be assessed.”

The Board of the CBA made a decision on March 19 to keep the discount rate at 6.25 percent. At the same time, the lower limit of the interest rate band was set at 5.75 percent while the upper limit at 6.75 percent. The next decision of the board of the Central Bank of Azerbaijan on the parameters of the interest rate corridor will be announced on April 30, 2021.