11:26 - 28.12.2024

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December 28, Fineko/abc.az. In 2025, the monetary policy of the Central Bank of Azerbaijan (CBA) will be aimed at ensuring the stability of inflation and keeping it within the established range.

ABC.AZ informs that this is stated in CBA's statement on the main directions of monetary policy for 2025.

According to the statement, reforms to improve the monetary policy framework will be continued.

In accordance with the Socio-Economic Gorwth Strategy 2022-26, the monetary policy goal for next year is to maintain annual inflation in the range of 4±2%.

According to CBA’s latest forecasts (October 2024), annual inflation will be at 5.8% in 2025, which corresponds to the established limits of the corridor. The CBA will continue to regularly update its inflation forecasts based on all-round analysis of inflationary factors. At that, inflation expectations will be assessed.

The issue of inflation stability is associated with a number of external and internal risks. In 2025, the main external factors influencing country’s inflation will remain the dynamics of commodity prices at the world markets, inflationary processes and economic activity in the partner countries. In the context of ongoing geopolitical tensions in the world, these external factors will remain volatile. Internal risks are associated with a possible excessive expansion of aggregate demand, changes in prices for government-regulated goods and services, as well as rising inflation expectations.

In 2025, the exchange rate channel will continue to play a key role in the implementation of monetary policy. The nominal effective exchange rate of the manat will remain one of the main factors influencing the import of inflation. According to the latest calculations based on forecasts of international analytical centers on bilateral exchange rates, the nominal effective exchange rate of the manat will continue to strengthen in 2025.

Next year, CBA's interest rate will be one of the main instruments influencing monetary conditions in the economy. Decisions on the interest rate range will be made taking into account changes in the balance of risks of internal and external factors of inflation, as well as updated macroeconomic forecasts.

Next year, CBA will continue to focus on developing its analytical and predictive capabilities. Within the policy analysis and forecasting system, modeling tools based on best practices will be regularly improved, and the depth and scope of research will expand. In order to increase the coverage of alternative statistical databases, cooperation with public and private organizations will continue.