Central Bank of Azerbaijan retains refinancing rate at 6.5% pa

BAKU. Sept 23 (Interfax) - The Central Bank of Azerbaijan retained the refinancing rate, or discount rate, at 6.5% per annum during the regulator's meeting on Wednesday.

The regulator's press release indicated that the lower limit of the interest rate corridor has been lowered to 5% pa from 5.5% pa and the upper limit remains at 7.5% pa.

The next meeting of the Central Bank on the key rate is on September 24.

The Central Bank notes that the parameters of the interest rate corridor were determined by taking into account actual and projected inflation trends, forex market dynamics, changes in banking sector liquidity, and recent trends in the global monetary environment.

Lowering the floor of the interest rate corridor to 5% is intended to incentivize interbank money market trading amid excess liquidity in the banking sector.

"Widening the corridor is expected to incentive more active interbank transactions by reducing the Central Bank's level of participation in the money market. Maintaining the ceiling of the interest rate corridor and the key rate at 7.5% helps stabilize inflation expectations," the regulator notes.

The Central Bank notes that annual inflation remains within the target range and is tracking according to the baseline forecast scenario. In August 2026, 12-month inflation was 5.7%, down 0.1 percentage points from the July figure. The Central Bank has retained the forecast for annual inflation to be within the target range over the medium term.

Regarding the forex market, the Central Bank indicates that the supply of foreign currency significantly exceeded demand. Purchases of foreign currency cash from clients by exchange offices exceeded sales by $673 million in 8M 2026. The dollarization level of resident individual deposits fell by 3.7 percentage points over the past 12 months to 25.8% in July 2026.

"The Central Bank conducted foreign currency purchases amid a sharp drop in demand and an increase in supply on the forex market. The Central Bank's foreign currency reserves grew 32.9% to $15.3 billion in 8M 2026, marking an all-time high in the regulator's foreign currency reserves," according to the statements.