BAKU: The Central Bank of Azerbaijan (CBA) has lowered the refinancing rate from 7.5 percent to 7.25 percent as of May 1, Trend reports via CBA.

The CBA data shows that the upper limit of the interest rate corridor was lowered from 8.5 percent to 8.25 percent, while the lower limit was kept unchanged at 6.25 percent.

“This decision was made after considering the comparison between actual and projected inflation against the target range of 4±2 percent, along with efforts to stabilize inflation expectations and assess shifts in risk balance. With a downward adjustment in the inflation forecast, lowering the upper boundary of the interest rate corridor and the refinancing rate aims to facilitate a more accommodating monetary environment. Maintaining the lower boundary unchanged aids in mitigating volatility in interbank interest rates. Additionally, when setting these parameters for the interest rate corridor, their potential impact on interbank market interest rates was also carefully considered,” CBA’s state
ment reads.

During a press conference dedicated to changes in parameters of the discount rate, CBA chairman Taleh Kazimov stated that according to calculations by the Central Bank of Azerbaijan (CBA), the neutral discount interest rate is in the range of 6-7 percent.

“Logically, we are still in the direction of tightening. Currently, our goal is to achieve a neutral discount interest rate. We believe the neutral rate level is 7 percent. Currently, the discount rate is 7.25 percent, indicating that the central bank is still moving towards tightening. Based on the Central Bank’s medium-term plan, in the absence of drastic changes in the domestic and global economies, the regulator intends to keep the current parameters unchanged,” Kazimov noted.

To note, the next decision of the Central Bank on the parameters of the interest rate corridor will be made public on June 21.

Source: Trend News Agency