BAKU, Azerbaijan, March 29. Over the past 12 months, the world's largest central banks have been actively raising the interest rate, Gulnara Khaidarshina, Deputy Head of Research at the Russian Gazprombank, told Trend.
According to her, the US Federal Reserve System during this period raised the rate 20 times, from 0.25 percent to 5 percent (upper limit), and the European Central Bank - from 0 to 3.5 percent.
"Such a serious increase in rates led to the depreciation of investments in government bonds on the balance sheets of banks in developed markets and, thereby, an increase in unrealized losses. This gives reason to believe that in the near future, in order to support the banking system and avoid excessive liquidity injections, the cycle of raising rates by the world's leading central banks may stop," she said.
According to her, this, in turn, will ease the pressure on the growth of the largest economies from tightening monetary conditions and will contribute to a further recovery in external demand, which will be positive for the export-oriented economy of Azerbaijan.
On March 29, the Central Bank of Azerbaijan 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.
It was noted that this decision was made given the dynamics of factors that have a downward and upward impact on the price level in the internal and external environment. 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.