Baku:The key interest rate in Azerbaijan is projected to decrease to 6% by the end of 2026, as outlined in a forecast by Fitch Solutions, part of Fitch Group. The report indicates a further decline to 5.88% by the end of 2027, and a continuous drop to 5.44% by the end of 2028, before reaching 5.66% by the end of 2029.

According to Azeri-Press news agency, the Central Bank of Azerbaijan (CBA) is anticipated to adopt a cautious and data-dependent monetary policy throughout 2026-2027. This approach is based on expectations that inflationary pressures will gradually ease during this period. However, Azerbaijan remains susceptible to supply chain disruptions due to geopolitical risks in the region.

The report highlights that annual inflation in Azerbaijan reached 5.7% in June 2026, nearing the upper limit of the Central Bank's target range of 2-6%. Fitch Solutions attributes the rising price pressures partly to supply chain issues stemming from the US-Iran conflict.

The agency further explains that increasing inflationary pressures have slowed the interest rate reduction process initiated by the Central Bank in December 2025. In light of ongoing risks of price increases, the Central Bank is expected to proceed with caution in its upcoming rate decisions.

Currently, the Central Bank's key interest rate is at 6.5%, with an interest rate corridor ranging from 5% to 7.5%. The next decision on the key interest rate by the CBA is scheduled for October 29, with the final rate announcement of the year set for December 23.