Early last week the National Bank of Azerbaijan announced on the increase of bank rate from 7.5% to 8%. He increase was implemented on the base of a resolution of NBA dated 1 June 2005 and comes as the second from the beginning of the year. The resolution is motivated with further strengthening of measures in reduction of inflation pace in the country.
Nationwide, the rates in Azerbaijan, like in most world countries with the transition economy, is a forma tool. Its up and down fluctuation almost does not impact the values of money. It was also asserted by the previous rise of rates by 0.5 points. The major reason of it is a conservative position by the NBA in the allocation of centralized credits. So, we can assert with confidence that next rise will not affect on the value of money in the economy and will not affect the inflation processes.
The NBA will use the same rate policy, which worked quite well inexperience, as a major mechanism for fighting with inflation. Until the growth pace of prices falls to optimal level, manat will continue a rise. Of course, the placement of short-term notes with regard of sterilization of surplus money mass will also continue.
Thus, next rise in the rates is a formal step and does not underlines the NBA’s loyalty to an idea of cut in inflation pace.