Baku, Azerbaijan, Sept. 18
Trend:
The Central Bank of Azerbaijan (CBA) kept the discount rate at 15 percent.
This decision was made at a meeting of the CBA Board on Sept. 18.
The CBA Board also decided to leave unchanged the lower limit of the interest rate corridor at 10 percent and the upper limit at 18 percent.
A CBA message said that this is due to the fact that macroeconomic stability and positive dynamics of activity in the real sector are maintained. Given the balance of payments surplus, balance is ensured in the currency market and manat rate remains stable. The money supply grows in accordance with the demand and need of the fiscal sector for liquid assets. Analysis of monetary and non-monetary factors of inflation shows that there is no need for significant correction of the monetary policy.
A number of macroeconomic indicators were taken into account when making a decision regarding the parameters of the interest rate corridor.
In the eight months of 2017, an economic growth of 2.2 percent was registered in the non-oil sector. The non-oil industry saw an economic growth of 4.6 percent, trade - 1.8 percent, tourism - 2.6 percent and ICT - 4.9 percent.
A series of events, aimed at developing the non-oil sector, expanding investment demand of the state and external demand, played an important role in continued economic growth. Results of the real sector monitoring held by the CBA confirm the increase in economic activity in the non-oil sector.
In 1H17, a surplus of 2.5 percent of GDP was registered in the current account of the balance of payments.
This was possible due to reducing the current account deficit as a result of significant increase in the average world price of oil, as compared to the same period of 2016, and the implemented measures of macroeconomic policy. In January-August 2017, the trade surplus amounted to $1.9 billion, Azerbaijan’s strategic currency reserves grew by 11.5 percent.
The CBA said manat’s rate against the US dollar has strengthened since early 2017, which mitigates inflation expectations. Sustainable stability of manat’s rate is accompanied by reduction of dollarization.
According to the State Statistics Committee, the average annual inflation rate in the eight months of 2017 amounted to 14 percent. There have been no significant changes in the dynamics of prices and inflation expectations.
The next discussions on changing parameters of the interest rate corridor will take place on Nov. 15.