Dynamics of deposits in national currency remains positive in Azerbaijan - Gazprombank
Dynamics of deposits in the national currency remains positive in Azerbaijan, Deputy Head of the Market Research Department at Russian Gazprombank Gulnara Khaidarshina told Trend.
According to Khaidarshina, in November, deposits in Azerbaijani banks in national currency increased by 3.5 percent compared to the previous month and by 29 percent since the beginning of the year.
"We consider this as a positive signal for Azerbaijan’s Eurobonds because the absence of a dollarization growth tendency is an important factor in supporting the sovereign ratings of this issuer," she said. "Taking into account the preservation of the cautious tone in the press release of the Central Bank of Azerbaijan (CBA), we don’t rule out another increase of the refinancing rate in January 2022 by 25–50 basis points, after which the Azerbaijani regulator will have the opportunity to take a break in tightening monetary conditions."
"The CBA will be able to consider the issue of reducing the rate in the second half of next year, provided that the inflation risks indicated in Friday's press release are not realized," the Russian bank’s representative noted.
Following the last CBA meeting this year, the regulator increased the refinancing rate by 25 basis points - up to 7.25 percent.
The upper limit of the interest rate band was raised by 25 basis points to 8.25 percent, while the lower limit was maintained at six percent. The Central Bank noted the increase in inflationary pressure, primarily under the influence of external factors. At the same time, it emphasized that the effect of the previous rate hikes had already begun to manifest itself.
According to the regulator's estimates, the share of monetary factors in the formation of inflation is less than 10 percent and tends to decrease. At the same time, the stable USD / AZN rate allowed limiting external inflationary pressure.
Besides, against the background of increased external inflation risks, the Central Bank again revised upward the forecast of average annual inflation to 6.3-6.6 percent, inflation at the end of the year - to 11.4-11.9 percent, which is almost twice the upper the border of the target range.
At the same time, the regulator shared its expectations for the inflation trajectory in 2022. In accordance with them, inflation will stabilize in the first quarter of next year, after which it will begin to slow down and return to the forecast range in the second half of 2022.