Central Bank of Azerbaijan keeps refinancing rate unchanged

Finance Materials 21 June 2024 11:05 (UTC +04:00)
Kamran Gasimov
Kamran Gasimov
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BAKU, Azerbaijan, June 21. The Central Bank of Azerbaijan (CBA) has decided to keep the refinancing rate unchanged at 7.25 percent, Trend reports.

According to the CBA, the upper and lower limits of the interest rate corridor also remained at 8.25 percent and 6.25 percent, respectively.

"The decision was taken after considering the comparison between actual and projected inflation against the target range of 4±2 percent, the dynamics of inflationary factors, and a comprehensive risk assessment. Balancing factors that either increase or decrease inflation was one of the factors influencing the decision to keep the interest rate corridor unchanged," stated officials at the Central Bank.

Since the last meeting, annual inflation has remained below the lower bound of the target range.

"In May 2024, the annual inflation rate was 0.3 percent, consistent with the CBA's April forecasts. Core inflation for the same period stood at 0.4 percent. Food prices saw an annual deflation of 1.4 percent, while non-food items experienced inflation of 1 percent, and services recorded inflation at 2.2 percent. Household surveys indicate expectations for inflation over the next 12 months are near the lower boundary of the target range.

The global inflation environment remains generally neutral. According to the World Bank, commodity prices rose by 5.6 percent year-on-year in May 2024, including a 5.1-percent increase in non-energy commodities. However, the Food and Agriculture Organization of the United Nations (FAO) reported a decrease of 3.4 percent in food prices. The strengthening nominal effective exchange rate of the manat contributed to reducing import inflation (19.3 percent in 2023 and 3.2 percent for the first 5 months of 2024)," the CBA explained.