BAKU, Azerbaijan, June 20. Last week it became known that the Central Bank of Azerbaijan (CBA) decided to leave the discount rate unchanged, at the level of 7.75 percent, Trend reports.
According to CBA, the upper limit of the percentage corridor remained at 9.25 percent, the lower - 6.25 percent.
Additionally, it became known that inflation in Azerbaijan is predicted to be lower than actual rates by the end of 2022.
According to CBA forecast, inflation is expected to return to the target range in the medium term.
Last week it was also reported that the strengthening of the nominal effective rate of the manat (Azerbaijan’s national currency) is the main reducing monetary factor in the decomposition of both actual and projected inflation.
The monetary base in manat, in context of surplus state budget and activation of sterilization operations by CBA, decreased by 5.5 percent from January through May 2022.
According to CBA, more active usage of required reserve ratios is envisaged in order to additionally sterilize excess liquidity, in circumstances of increased inflationary pressure.
The entry into force of the amendments to Rules ‘On the Norm, Procedure for Calculating and Holding Required Reserves’ introduced by CBA resolution dated June 6, 2022, creates conditions to make flexible decisions regarding required reserves.
An increase in required reserves to four percent for deposits in national currency and up to five percent for deposits in foreign currency has a positive impact on the value of liabilities in the banking sector by a total of 0.044 percent.