BAKU, Azerbaijan, Dec.23
By Zeyni Jafarov – Trend:
The Central Bank of Azerbaijan (CBA) reduced the refinancing (discount) rate by 0.25 percentage points contrary to expectations of keeping it at 6.5 percent at the peak of budget expenditures and amid continued external uncertainty, Gulnara Haydarshina, Deputy Chief of the Market Analysis Department of Russian Gazprombank, told Trend.
According to Haydarshina, the CBA’s attitude, given external risks, remained cautious. The reducing decision was based primarily on keeping low inflationary risks in the economy, unstable recovery of external economic activity, and shifting the balance of risks towards an economic slowdown.
The bank’s representative also stressed that the situation in Azerbaijan’s currency market remains stable and noted the positive trends in the global oil-gas market and the prospects for their preservation in the upcoming year.
"Taking into account the signal of the Azerbaijani economy's expected recovery next year, with the assistance of fiscal incentives, we expect a cautious approach by the CBA to lower the discount rate in the first quarter of 2021," she summed up.
On December 18, 2020, the Board of the Central Bank of Azerbaijan made a decision to reduce the discount rate from 6.5 percent to 6.25 percent. At the same time, the lower limit of the interest rate band was set at 5.75 percent, and the upper limit - at 6.75 percent.
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