Azerbaijani Banks Association head: CBA's decision on increasing rate is timely response to changes in world economic situation
Azerbaijan, Baku, Oct. 30 / Trend N. Ismayilova /
The Azerbaijani Central Bank's decision on increase of the rate up to 3 percent from November 1 is a timely response to changes in the economic situation in the world, Eldar Ismayilov, the President of the Azerbaijani Association of Banks, said.
"Today, the real economic relations and economic situation in general are changed in the world. Despite the fact that the crisis has not been over yet, there are some positive trends. CBA promptly responded to these changes and raised interest rates. I think it will have a positive impact on banking sector, " he said.
He said that CBA always clearly analyzes and promptly responds to any changes in the global economy by providing adequate support to the country's banking sector. The repeated reduction of an interest rate during the crisis is an example.
"CBA, as the supervisory body, having a good analytical basis, promptly responds to these processes," he said.
Yesterday, CBA announced about raising the rate up to 3 percent from November 1. At the same time, compulsory reservation on foreign liabilities of the banks was set at 0.5 percent to regulate external monetary factors of growth of money supply.
The increase in balance of payments and foreign reserves and the expansion of the money supply due to Azerbaijan's internal and external sources have been observed amid the global economic recovery since early 2010.
Earlier, according to the CBA Board's decision dated May 25, 2010, the rate was reduced by 1 percent up to 2 percent. Last year, the rate was reduced in three stages from 15 to 8 percent. At the same time, all central banks in the world conducted a policy of reducing interest rates as the economy needed cheap money.
Financial institutions also felt a need for cheap resources, both to stabilize their situation and provide the country's economy with cheap money.
Azerbaijani monetary policy allowed to confront the global financial crisis and to support the country's banking system, namely to solve the problems with liquidity,providing the banks with the access to additional resources, while there were shortages of liquidity on the world markets.