Azernews.Az

By Aynur Jafarova

The Central Bank of Azerbaijan (CBA) has reduced its discount rate by 0.75 percentage since July 30.

Now the bank's rate stands at 3.5 percent. The decision was made by the management board of CBA.

The parameters of the interest rate have also changed.

"The corridor ceiling has been reduced from 6 percent to 5 percent, while the corridor floor was decreased from 0.5 percent to 0.1 percent," CBA said on July 30.

The CBA management board has also decided to reduce the reserve requirements for all deposits of the banks from 3 percent to 2 percent.

"The decision was made given the low inflation level and the total demand factors that influence the growth rates of the economy, support the diversification of the national economy and increase of the investment and loan activity in the real sector," the bank said.

During the meeting of the CBA management board, the participants emphasized the continuation of the dynamic development of the country's economy adding that the country's revenues and the level of its well-being have increased in the first half of 2014.

Azerbaijan's economic growth stood at 2.1 percent and its non-oil economy grew by 7 percent in January-June 2014.

The country maintains its position in the world in terms of financial sustainability of national economy and macroeconomic stability. The stability of manat's exchange rate continues to play an important role in maintaining macroeconomic stability as well.

The sources of internal development continue to play a significant role in Azerbaijan's economic development.

In the first half of 2014, the average annual inflation dropped by 0.4 percentage points compared to the same period of 2013 standing at 1.6 percent.

The CBA's currency reserves increased by 21 percent and reached $14.152 billion in 2013. The bank plans to increase the volume of its reserves to $16 billion by late 2014.

The rapid growth of currency reserves was the main factor for the formation of a strong macroeconomic buffer and reduction of the sensitivity of Azerbaijan's domestic economy towards external shocks.

The increase in reserves has helped Azerbaijan to keep its continued net investment at an acceptable level.