CBA to introduce new frameworks of monetary policy to meet post-crisis challenges
Azerbaijan, Baku, Jan.05 / Trend , N.Ismayilova /
The main objectives of the Central Bank of Azerbaijan (CBA) for 2010 are to preserve inflation at a low level, the stability of the manat rate, to deepen the stability of the financial and banking sector, to cover the economy's demand for cash, according to CBA statement on main directions of monetary policy for 2010.
CBA using its mandate will support hitting average annual inflation at the level of officially forecasted three percent.
"Meeting this objective will ensure medium and long-term stability of economy. At the same time, this forecast will be specified during a year depending on influence of recovery of global economy on internal inflation," CBA said in the statement.
The fundamental basis for preserving stable exchange rate of manat is the forecast on surplus of the country's balance of payments, even in a conservative scenario of oil prices forecast. While conducting exchange rate policy preservation of the international competitiveness of the country will also be considered.
The Central Bank plans to provide flexibility to meet the needs of the economy in the credit and liquidity. In this context, new liquidity facilities will be offered to support the real sector and actions will be taken to reduce interest rates.
The central bank will launch creating and introducing new frameworks for monetary policy which will meet the post-crisis challenges in the medium term. Inflationary policy, other macroeconomic targets and adequate instruments of control are in the first stage of this policy. An arsenal of macro prudential tools of countercyclical character for risk management, maintenance of stability in the financial sector and ensuring the activity of the sector are in the second stage. The latest global consensus shows that only the introduction of the tools of classical monetary policy can ensure the effective management of macroeconomic stability by synchronizing the introduction of new macro prudential tools.
Ensuring a gradual transition to a free exchange rate regime, deepening of the interbank money market and other institutional work are essential for the effective implementation of new frameworks of monetary policy.