BAKU, Azerbaijan, March 29. In accordance with the base scenario of the Central Bank of Azerbaijan (CBA) for 2023, the annual inflation forecast of about eight percent remains unchanged, Trend reports via the CBA.
"Despite the fact that the domestic market is experiencing a decline in inflation from the peak, uncertainty remains regarding the expected change in supply and demand factors and the behavior of economic entities," said the CBA.
"With a stimulating fiscal policy and an increase in the country's foreign exchange earnings, total demand is expanding, while economic growth in the non-oil sector remains high. The 4th package of social reforms implemented since the beginning of this year and ongoing lending activity support consumption, which is the main component of total demand," the CBA added.
The CBA noted that the annual growth of the loan portfolio for banks and non-bank credit institutions remains high and amounted to 15.7 percent in February this year.
"The decision taken since the beginning of the year to change prices for certain services (products), the cost of which (tariffs) is regulated by the state, may affect inflation expectations. The noted factors have an effect on the fact that the projected inflation still exceeds the assumed target. In accordance with the Central Bank's scenario for 2023, the annual inflation forecast (about 8 percent) remains unchanged," the statement said.
Today, the CBA decided to raise the interest rate by 0.25 percentage points to 8.75 percent. The upper limit of the interest rate corridor was raised from 9.5 percent to 9.75 percent, and the lower limit - from 6.75 percent to 7 percent. Further decisions on monetary policy will be made depending on the dynamics of inflation, the level of deviation of the forecast from the target, and the persistence of risks.