Azerbaijan, Baku, Jan. 27 / Trend /
Leyla Abdullayeva, Trend Analytic Center Expert
The central banks in many countries prefer to reduce the rate in terms of the growth of the debt crisis in the euro zone and thereby slowing the world economy.
The European Central Bank keeps the basic rate, by reducing it from 1.25 percent to 1 percent on December 8, 2011. This level is a record low level since the financial crisis of 2009, when the rate also remained at the level of one percent. It should be stressed that the International Monetary Fund (IMF) called for the European Central Bank to lower the refinancing rate in early October last year if the downside risks for the economic growth are not diminished.
The U.S Federal Reserve System decided this week to keep the rate in the range of 0-0.25 percent per annum and keep it at this level until late 2014. The Israeli bank lowered the bank rate as of February by 0.25 percent - to 2.5 percent.
The committee on monetary policy of the Georgian National Bank also decided in late 2011 to reduce the refinancing rate by 25 basis points to 6.75 percent.
At present, the Azerbaijani Central Bank (CBA) does not see any need to revise the rate. The parameters of interest rate corridor, including the rate will be adequately regulated by the CBA, depending on the situation in the economic cycle and the financial markets.
The rate in Azerbaijan was revised last time in early May 2011. According to the CBA board decision, the rate has been increased from 5 to 5.25 percent since May 6, 2011. The decision was made to increase the rate because a process of rapid growth in balance of payments and foreign exchange reserves is observed. The potential sources of money growth are being expanded.
The decrease in the central bank's rate is considered by credit institutions and non-bank organizations as a signal for targeting to the expansive policy of the central bank. The increase in the rate serves a signal to conduct the restrictive monetary policy.