BAKU, Azerbaijan, May 5. Russian Gazprombank predicts that the Central Bank of Azerbaijan (CBA) may take a pause in tightening monetary conditions in the second half of 2023, Deputy Head of Research Chief CIS Macroeconomist of Gazprombank Gulnara Khaidarshina told Trend.
According to Gazprombank's forecast, the CBA may resume the discount rate reduction cycle no earlier than the first quarter of next year.
"The CBA continues to implement its anti-inflationary monetary policy. The average interest rate on the interbank market of unsecured money has increased by 1.2 percentage points since the beginning of the year thanks to these decisions. The CBA is developing the market of short-term notes in order to improve transmission mechanisms,” she said.
According to her, in order to increase competition at auctions for the placement of notes, the formation of a yield curve and support activity in the secondary market, the investor base was expanded. Resident commercial legal entities operating in the non-oil and non-state sectors (except for legal entities engaged in financial and insurance activities) will receive the right to own notes in addition to banks.
The CBA decided to raise the discount rate by 0.25 percentage points to 9 percent on the third of May. The upper limit of the percentage corridor was raised from 9.75 percent to 10 percent, and the lower limit - from 7 percent to 7.5 percent. The next decision on monetary policy will be made public by the CBA on June 21, 2023.