Baku: Azerbaijan’s Central Bank, along with other CIS countries such as Uzbekistan, Kazakhstan, and Armenia, is facing limited opportunities to lower interest rates this year, as reported by ING Group, the largest financial group in the Netherlands. All four countries have shown concerns about increasing inflationary risks stemming from the external environment, leading to a decision to maintain their current policy rates despite market expectations for a reduction.

According to Azeri-Press News Agency, the central banks of Azerbaijan, Uzbekistan, and Armenia have recently followed Kazakhstan’s earlier stance on inflationary risks, choosing to keep policy rates unchanged over the past month. This decision was made across four different policy meetings, highlighting the external pressures these economies are facing. The Consumer Price Index (CPI) trajectories in these countries are generally trending upwards, reinforcing ING’s forecast that the likelihood of key rate cuts in the near future is minimal.

ING has adjusted its CPI expectations for the region, increasing them by 0.5-1.0 percentage points. However, the financial group has slightly revised down its inflation forecast for Azerbaijan for various quarters in 2025 and the full year. For the second quarter of 2025, the forecast has been adjusted from 6.1% to 5.9%, for the third quarter from 4.6% to 4.4%, for the fourth quarter from 4.7% to 4.6%, and for the full year from 5.2% to 5.1%. Notably, ING has only raised its inflation forecast for Azerbaijan for the fourth quarter of 2026 from 5.6% to 5.7%.