CBA talks decrease of discount rate, revenues from monetary reserves

The Central Bank of Azerbaijan (CBA) has decreased the discount rate from 9.75 percent to 9.25 percent, Elman Rustamov, the chairman of the CBA, said at a press-conference in Baku on February 1, Trend reports. Business 5

TThe uppermost limit of the percentage corridor has been reduced from 11.75 percent to 11.25 percent, the lowest limit of the percentage corridor has been reduced from 7.75 percent to 7.25 percent. “A decrease in the discount rate and interest rate parameters is stipulated by the stabilization of oil prices, a low inflation and a stable macroeconomic situation,” Rustamov said.

Since the last meeting of the Management Board dedicated to the monetary policy, inflation has kept falling. Average annual inflation is expected to remain at the current rate as of the end-2018.

A sustainable macroeconomic framework is a key stabilizing factor in the balance of risks. The fact that the interest rate corridor parameters are left unchanged on this backdrop is attributable to rising uncertainties related to the external environment. In the long view the monetary policy will react to the dynamics, sustainability and transmissibility of inflationary factors, CBA said earlier.

Successfully implemented reforms stabilized the macroeconomic situation and the nominal incomes of the population exceeded inflation.

In total, the CBA reduced the discount rate four times during 2018: in February from 15 percent to 13 percent, in April from 13 percent to 11 percent, in June from 11 percent to 10 percent, in October from 10 percent to 9.75 percent. The discount rate was kept unchanged in August and December

In addition, CBA has given information about revenues from monetary reserves.

In 2018, revenues of the Central Bank of Azerbaijan (CBA) from managing monetary reserves amounted to $115 million, Chairman of the CBA, Rustamov said.

Rustamov noted that in 2018, Azerbaijan's monetary reserves held by the CBA increased by about 300 million manats or 5 percent. The growth of the reserves is not related to purchase of currency by the bank, he added.

Further, the chairman noted that in 2018, the main aim was reducing inflation.

"During the year, we forecasted inflation rate to be around 6 - 7 percent. However, by the end of 2018, average annual inflation was 2.3 percent," he said.

Rustamov also added that the macroeconomic situation in the country in 2019 is almost the same as it was in the previous year.