By CentralBankNews.info
Azerbaijan’s central bank cut its benchmark interest rate for the 10th time since February 2018 but signaled it may now pause by saying future decisions on interest rates will be based on actual and projected inflation along with the impact of internal and external risks to inflation.
The Central Bank of the Republic of Azerbaijan (CBA) cut its discount rate by 25 basis points to 8.0 percent and has now cut it by 7 percentage points since last February. It is CBA’s sixth rate cut this year, with the rate cut 175 points.
CBA’s reference to inflation determining its next rate move compares with its guidance from July when it said the trend toward a neutral policy stance would continue as long as inflation is expected to remain within its target of 4.0 percent, plus/minus 2 percentage points.
Today CBA said it latest forecast sees inflation remaining within its target range by the end of 2019 and while inflation expectations had not changed, external factors – such as volatile trade, currency and commodity markets in the context of worsening global growth – now have a greater potential to impact inflation than domestic factors.
Azerbaijan’s inflation rate eased to 2.6 percent in August from 2.7 percent in July but is expected to rise to within the target range by the end of this year due to rising fiscal spending and consumption.
In the first 7 months of the year, gross domestic product expanded by 2.5 percent, with the growth in the non-oil sector 3 percent and currency reserves have risen 10.5 percent, or by US$4.7 billion, since the start of the year to $49.4 billion.
