Gazprombank talks upcoming change in refinancing rate by CBA

Economy Materials 28 March 2023 11:16 (UTC +04:00)
Sadraddin Aghjayev
Sadraddin Aghjayev
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BAKU, Azerbaijan, March 28. According to the forecast of the Russian Gazprombank, the Central Bank of Azerbaijan (CBA) following the upcoming meeting (March 29) will again increase the refinancing rate by 25 basis points to 8.75 percent, Gulnara Khaidarshina, Deputy Head of Research at Russian Gazprombank, told Trend.

She argues for such a scenario in favor of a reversal of inflation in the direction of acceleration, continued high dollarization of household deposits in a negative real rate, as well as an unstable trend towards a decrease in the money supply.

"At the February meeting, the Azerbaijani bank continued the cycle of normalizing monetary conditions and expectedly raised the refinancing rate by 25 basis points to 8.5 percent. In addition, in order to fine-tune monetary conditions, the Central Bank raised the lower limit of the interest rate corridor by 50 basis points to 6.75 percent and the upper one by 25 basis points to 9.5 percent. This made it possible to expand the bank's ability to manage credit activity in the economy," Khaidarshina said.

She also noted that following the previous meeting, the CBA raised the rate again. Khaidarshina said that the reason behind it was the excess of economic growth over the potential level in the context of stimulating fiscal policy and a serious inflow of foreign currency to the domestic market.

"The Azerbaijani Central Bank informed about a possible pause in the rate increase if the disinflationary trend persists. However, in February, pro-inflationary pressure in the economy increased, which leaves the issue of raising the rate on the agenda," Khaidarshina added.

Earlier, the Central Bank of Azerbaijan said that the next decision on the parameters of the interest rate corridor will be announced on March 29. Besides, the CBA decisions on the above parameters will be published on May 3, June 21, July 26, September 20, November 1 and December 20.

Previously, on February 1, the CBA decided to raise the discount rate by 0.25 percentage points to 8.5 percent. The upper limit of the interest corridor was raised to 9.5 percent, and the lower limit to 6.75.