Cen­tral Bank an­nounces in­fla­tion forecasts

Azer News - - Business - By Sara Is­rafil­bay­ova

The Cen­tral Bank of Azer­bai­jan (CBA) has re­duced the dis­count rate by 0.25 per­cent (from 10 per­cent to 9.75 per­cent).

CBA Chair­man El­man Rus­ta­mov made the re­marks at a press con­fer­ence on Oc­to­ber 30.

The CBA also low­ered the up­per limit of the cap from 12 per­cent to 11.75 per­cent, and the lower limit of the floor from 8 per­cent to 7.75 per­cent.

“Fur­ther changes in the dis­count rate will de­pend on the com­pli­ance of the pro­jected in­fla­tion with the tar­get cap and floor,” Rus­ta­mov said.

As Rus­ta­mov noted, the new pa­ram­e­ters of the dis­count rate cap and floor in the con­text of low in­fla­tion, along with the sup­port of na­tional cur­rency fees, as well as the neu­tral­iza­tion of other fac­tors will serve as a sig­nal for re­duc­ing dis­count rates on loans.

In 2018, the CBA had ear­lier re­duced the dis­count rate in Fe­bru­ary from 15 to 13 per­cent, in April from 13 to 11 per­cent, in June from 11 to 10 per­cent and in Au­gust it re­mained un­changed.

The next dis­cus­sion on the dis­count rate will take place at the end of De­cem­ber 2018.

He went on to say that the in­fla­tion in Azer­bai­jan can reach three to four per­cent by the end of the year, adding that in nine months of this year, the in­fla­tion in the coun­try was at the level of 2.6 per­cent.

Rus­ta­mov stressed that in­fla­tion is form­ing be­low the tar­get col­lar of six to eight per­cent.

The chair­man of the CBA noted that in gen­eral there is a ten­dency to lower in­fla­tion. The fac­tors that in­flu­ence sta­bi­liza­tion and re­duc­tion of in­fla­tion risks in­clude fa­vor­able oil prices, a sur­plus in the bal­ance of pay­ments and the large amount of for­eign ex­change re­serves. These fac­tors also sup­port sta­bil­ity in the for­eign ex­change mar­ket, he added.

Rus­ta­mov said that against the back­drop of low­er­ing of the ex­pec­ta­tions of price in­crease in the sphere of trade and ser­vices, the busi­ness sec­tor in Azer­bai­jan is waiting for lower in­fla­tion.

He also noted that change in the in­ter­est rate in the fu­ture will de­pend on con­form­ity of the fore­casted in­fla­tion to the an­nounced tar­get in­ter­val.

Speak­ing of cur­rency re­serves of the Bank, Rus­ta­mov noted that as of to­day, they make up $5.54 bil­lion.

Fur­ther, he un­der­lined that Azer­bai­jan’s cur­rency re­serves will con­tinue to in­crease by year-end.

“As a re­sult of the im­prove­ment of the in­di­ca­tors of the for­eign sec­tor, bal­ance in the do­mes­tic cur­rency mar­ket was pre­served and cur­rency re­serves reached $45 bil­lion. Pos­i­tive ten­den­cies in the for­eign en­vi­ron­ment are ex­pected to con­tinue dur­ing the re­main­ing part of 2018,” the chair­man ex­plained.

Touch­ing upon the trade bal­ance, Rus­ta­mov pointed out that in nine months of 2018, the sur­plus was 19 per­cent of the GDP.

He stressed that ex­port of the non-oil goods in Jan­uary-Septem­ber 2018 in­creased by 13 per­cent com­pared to the same pe­riod of 2017.

More­over, he em­pha­sized that the sharp de­cline in ex­change rates of Azer­bai­jan’s trad­ing part­ners did not have a sig­nif­i­cant im­pact on the coun­try's for­eign trade bal­ance.

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