BAKU, Azerbaijan, November 15. The money market in Azerbaijan has doubled since 2022, Chairman of the Central Bank of Azerbaijan (CBA) Taleh Kazimov said, Trend reports.
He spoke at the plenary session "Monetary policy in current conditions" within the XI Congress of Financiers of Kazakhstan.
"At that period there was no interbank market in the financial sector, there was a very shallow inter-money market, there was a large liquidity in the banking sector, 80 percent of which was concentrated in 2-3 systemically important banks. The interest rate channel was weak, consumer lending was growing. The Central Bank of Azerbaijan was able to radically change the interaction strategy with the market. We started to give quarterly forecasts on oil and inflation. Also, certain restrictions on consumer lending were introduced in July 2022, which reduced credit growth from 2.8 percent to 1.6 percent per month. Our goal was to create an interbank market. And as a result, the money market in the country has been able to double in size," he said.
According to him, since the CBA started introducing the new monetary policy environment, standing facilities as well as open market operations have been provided for the first time.
"Inflation in Azerbaijan reached 13 percent on April 2022, it peaked at 15.6 percent in October of the same year, and in October of this year, annual inflation was 3.9 percent. Our trading partners' inflation was almost 20 percent on April; it reached 22.3 percent on October last year. It is now in the range of 10.1 percent. Our analysis shows that at least 70 percent of inflation in Azerbaijan was imported," he said.
The CBA chairman emphasized that to date, inflation in Azerbaijan has fallen to 3.9 percent from a peak of 15.6 percent mainly due to the strengthening of the nominal effective rate (it strengthened by 21.6 percent in 2023).
"Knowing that the Federal Reserve will raise rates, thereby there will be an outflow of currency of less risky countries, which will lead to a fall in the currency of our trading partners, and with our stable exchange rate, this will help contain inflation," Kazimov said.
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