Friday, October 25, 2019

Azerbaijan cuts rate 11th time as inflation seen rising

     Azerbaijan's central bank cut its benchmark discount rate for the 11th time since February last year and said further decisions on the interest rate would depend on the impact of internal risks on inflation and external factors, with the aim of reaching the targeted inflation.
     The Central Bank of the Republic of Azerbaijan (CBA) reduced its discount rate by another 25 basis points to 7.75 percent and has now cut it by 7.25 percentage points since February 2018.
     It is the 7th rate cut this year and the rate has been lowered by 200 basis points.
     Azerbaijan's economy is recovering from a banking crises and a prolonged downturn, but a stable exchange rate, lower food prices, anchored inflation expectations and an improving fiscal position prices has kept inflation subdued, allowing the central bank to ease its policy.
     Inflation was steady at 2.6 percent in September and August and CBA expects inflation to be close to the center of its target range of 4.0 percent, plus/minus 2 percentage points by the end of 2019.
     The economy is expanding due to higher natural gas production and domestic demand, with growth in the first 9 months of the year of 2.5 percent, including 3.5 percent in the non-oil sector.
     Last year Azerbaijan's economy grew 1.4 percent, bouncing back from a contraction in the previous two years, and the International Monetary Fund has forecast growth this year of 2.7 percent and 2.1 percent in 2020.


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