
The Central Bank of Azerbaijan (CBA) suspended its monetary policy easing cycle in May 2024, with no additional reduction in the discount rate expected, reads a Fitch Ratings’ report on the confirmation of Azerbaijan’s credit rating, Report informs.
The agency estimates that the CBA will maintain the discount rate at its current level (7.25%), taking into account factors such as uncertainty in external markets, price increases for state-regulated goods within the country, and the domestic demand situation.
Fitch analysts also note some acceleration in inflation in Azerbaijan: “Annual inflation increased (4.9% yoy in December), but remains within the CBRA’s target band (4%±2pp). Average inflation will increase to 5.3%, up from estimated 2.1% in 2024, higher than the projected 3% for the ‘BBB’ median. The CBRA paused its easing cycle in May, and we do not expect additional rate cuts, given external uncertainty, increases to administered prices and the risk of domestic demand pressures from household and government consumption.”
The Central Bank of Azerbaijan has decided to maintain the interest rate at 7.25% during its last five meetings. The Netherlands’ largest banking group, ING Group, also believes that the Central Bank of Azerbaijan will keep the interest rate at 7.25% in 2025 but may increase it to 7.75% in 2026. The next Central Bank meeting regarding the interest rate is scheduled for January 22, 2025.