12:15 - 20.12.2023

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December 20, Fineko/abc.az. The Central Bank of Azerbaijan (CBA) has lowered the discount rate from 8.5% to 8%.

ABC.AZ reports that according to the CBA, the upper limit of the interest rate corridor was reduced from 9.5% to 9%, and the lower limit from 7% to 6.5%.

"This decision was made taking into account the presence of actual and projected inflation in the target range (4±2%), stabilization of inflation expectations, as well as oversupply in the foreign exchange market. Since the last meeting of the Board of Governors on Monetary Policy, the annual inflation rate has decreased faster than expected. In November 2023, 12-month inflation was 2.6%. Annual inflation has been within the target range for the third month. The monthly price dynamics continues to decrease versus 2022. Deflation was observed in November, which is unusual for this period: the consumer price index dropped by 0.2%," the CBA said.

Annual inflation declined due to the impact of external and internal factors.

"The slowdown in foreign-origin inflation was mainly due to the decline in global economic activity and tight monetary policy pursued in most countries. The continued decline in global commodity prices, especially energy and food prices, has reduced inflationary imports into the country. According to the World Bank, the commodity price index declined by 18.3% in November on an annualized basis, with energy prices down 23.9% and non-energy prices down 4.6%. According to the UN Food and Agriculture Organization (FAO), the food price index decreased by 10.7% in November on a year-on-year basis," the Central Bank said.

The CBA believes that the strengthening of the nominal effective exchange rate of the manat by 19.5% from January through November 2023 played an important role in reducing imported inflation under the conditions of maintaining balance in the foreign exchange market.