Central Bank of Azerbaijan may significantly reduce discount rate

Business Materials 25 July 2018 17:44 (UTC +04:00)

Baku, Azerbaijan, July 25

By Azad Hasanli - Trend:

The Central Bank of Azerbaijan (CBA) may reduce the discount rate to nine percent this year, and to bring it down to five percent by 2023, the analysts of the Russian rating agency ACRA believe.

The discount rate in the country has been 10 percent since June 14, 2018. The Central Bank has already reduced it twice by a total of five percentage points this year. The discount rate was much higher in 2015-2016 due to two devaluations and high inflation.

The experts of the agency believe that, the CBA will continue the policy of reduction, bringing the discount rate down to 7.5 percent in 2019, then reducing it to seven percent in 2020, to six percent - in 2021, and finally to five percent - in 2022.

The CBA Chairman Elman Rustamov said earlier the comfortable zone for the discount rate is eight percent taking into account the current level of inflation. Nevertheless, he did not rule out that if the inflation reaches the projected figure of six to eight percent in the second half of the year, and the price growth is activated in the last quarter of the year, the comfort zone may change upwards respectively.

Inflation in Azerbaijan amounted to three percent at the end of the first half of the year. The government expects that it will not exceed eight percent by the end of the year. The consumer price index will be six percent according to forecasts of ACRA agency.


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