CBA keeps discount rate, interest rate corridor parameters unchanged

The Central Bank of Azerbaijan (CBA) kept the discount rate at 15 percent.

This decision was made at a meeting of the CBA Board.

The CBA Board also decided to leave unchanged the lower limit of the interest rate corridor at 10 percent and the upper limit at 18 percent.

A CBA message said that this is due to the fact that macroeconomic stability and positive dynamics of activity in the real sector are maintained. Given the balance of payments surplus, balance is ensured in the currency market and manat rate remains stable. The money supply grows in accordance with the demand and need of the fiscal sector for liquid assets. Analysis of monetary and non-monetary factors of inflation shows that there is no need for significant correction of the monetary policy.

A number of macroeconomic indicators were taken into account when making a decision regarding the parameters of the interest rate corridor.

In the eight months of 2017, an economic growth of 2.2 percent was registered in the non-oil sector. The non-oil industry saw an economic growth of 4.6 percent, trade - 1.8 percent, tourism - 2.6 percent and ICT - 4.9 percent.

A series of events, aimed at developing the non-oil sector, expanding investment demand of the state and external demand, played an important role in continued economic growth. Results of the real sector monitoring held by the CBA confirm the increase in economic activity in the non-oil sector.

In 1H17, a surplus of 2.5 percent of GDP was registered in the current account of the balance of payments.

This was possible due to reducing the current account deficit as a result of significant increase in the average world price of oil, as compared to the same period of 2016, and the implemented measures of macroeconomic policy. In January-August 2017, the trade surplus amounted to $1.9 billion, Azerbaijan’s strategic currency reserves grew by 11.5 percent.

The CBA said manat’s rate against the US dollar has strengthened since early 2017, which mitigates inflation expectations. Sustainable stability of manat’s rate is accompanied by reduction of dollarization.

According to the State Statistics Committee, the average annual inflation rate in the eight months of 2017 amounted to 14 percent. There have been no significant changes in the dynamics of prices and inflation expectations.

The next discussions on changing parameters of the interest rate corridor will take place on Nov. 15.

Azerbaijan has shown biggest economic growth in region for 25 years – WB VP

Azerbaijan has shown the biggest economic growth in the region of European countries and Central Asia for 25 years, Cyril Muller, WB vice-president for Europe and Central Asia, said. Muller made the remarks at a ceremony dedicated to the 25th anniversary of Azerbaijan-WB cooperation in Baku.

Azerbaijani MPs, representatives of the country’s private sector and civil society are taking part in the event.

Muller stressed that the bank has been cooperating with Azerbaijan since the 1990s, the most difficult period for the country.

"During the entire period of cooperation, Azerbaijan has shown the biggest economic growth in the region which I oversee,” he said. “During this period, the poverty level decreased by less than 10 percent in the country."

“In general, the WB has allocated about $3.5 billion for the implementation of more than 50 projects in Azerbaijan,” he said. “The International Finance Corporation (IFC), which is also a member of the WB Group, has issued loans worth $470 million for Azerbaijan to implement 56 projects.”

"WB is proud of being involved in success achieved by Azerbaijan for 25 years," Muller added.

Azerbaijan joined the WB Group in 1992.

Azerbaijan eyes to form efficient monetary market

The Central Bank of Azerbaijan (CBA) has prepared program reforms to improve the monetary transmission mechanism in the country, Alim Guliyev, first deputy chairman of the CBA, said. He made the remarks in Baku at a scientific and practical conference dedicated to strategic road maps.

Guliyev noted that the program is being discussed at Azerbaijan’s Financial Stability Board and after its adoption, the work on formation of an effective monetary market in the country will be completed.

Azerbaijan’s Central Bank to switch to inflation targeting regime

The Central Bank of Azerbaijan (CBA) will switch to an inflation targeting regime in the medium term, Alim Guliyev, first deputy chairman of the CBA, told Trend. He said this will be a logical continuation of transition to the floating exchange rate for the Azerbaijani manat.

“When speaking of the medium term, a period of 3-5 years is meant,” Guliyev noted. It should be noted that many international experts agree that during global crisis, inflation targeting regime has advantage over other monetary policy regimes due to its greater stability. Inflation targeting can reduce economic volatility.