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 can be a preventive measure if there are forecasts on the increase in inflation, the head of the Baku Interbank Currency Exchange (BBVB) Farhad Amirbayov told Trend today.
"The CBA always differs by consistent and cautious actions. It is a signal that CBA monitors the situation, analyzes and acts. If it gradually raises interest rates, it will be an adequate actions in this situation," he said.
He said that central banks usually raise interest rates if they expect for the inflation to increase. He said that the food portion of the consumer basket in the country today has risen significantly.
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.