BAKU, Azerbaijan, December 20. The Central Bank of Azerbaijan (CBA) reduced the discount rate from 8.5 percent to 8.5 percent, Doctor of Economic Sciences Professor Elshad Mammadov told Trend.
He remarked that this is a crucial indicator of monetary policy easing as well as an expedient, justifiable, and necessary choice.
"It is impossible to raise investment in priority areas of Azerbaijan's real sector without easing monetary policy and increasing the efficiency of bank lending. Such initiatives result in increased business activity in the country and a greater utilization of economic potential," he added.
According to Mammadov, in the context of a market economy in Azerbaijan, the institute of internal private investments should be established, and to that end, the monetary policy should be loosened.
"Without increased investment activity, it is impossible to achieve long-term economic growth. At the same time, Azerbaijan has chances for effective money supply expansion without the risk of inflation," he said.
In his opinion, it is necessary to regularly diagnose the nature and structure of inflationary processes.
"In Azerbaijan, inflation is not caused by a surplus of money; rather, it is caused by a scarcity of products and services on the local market. To address this issue, we must boost investment by loosening financing restrictions. Commercial banks should take this into consideration," Mammadov said.
As a result, the Central Bank's decision on the discount rate, which takes effect on December 21, should have a favorable impact on effective economic development.