ACB announces parameters of monetary policy
BAKU: The Central Bank of Azerbaijan has made a statement on the basic principles of the policy of monetary and financial stability in 2011.
According to the Bank, the target framework of its strategy and monetary policy will aim to neutralize the negative effects of the crisis, and in 2011 in accordance with the CBA's mandate its monetary policy will focus on ensuring macroeconomic stability. On the basis of macroeconomic forecasts, estimates of external economic factors and given the increase in oil revenues in 2011, the CBA considers it expedient the following objectives: to keep annual (12month) inflation within singledigit values.
This requires coordination with other economic organizations, prevention of sharp growth of exchange rate of manat in addressing supply and demand of foreign currency, and for that it is needed to continue in the long term the policy of flexible exchange rate as a basis for control over money supply. In this context, gradual diversification of income in foreign currency, exchange risks, development of insurance instruments, reduction of dollarization of the economy, increase of the depth of the financial market, as well as control over the effect of real exchange rate of manat on export competitiveness.
In its policy the CBA will use flexible market-based instruments, such as parameters of interest rate corridor, the level of accounting rates. Regulation of liquidity in the banking system will be implemented through short-term operations and long-term refinancing will be applied only in cases of necessity. The mechanism will be improved, depending on the scale of the flow of "hot capital" in terms of norms of minimum redundancy and other standards in the banking sector. Improvement of macroeconomic efficiency of interbank money market will continue as well. -PB News