Azerbaijan's Central Bank lowers discount rate from 15% to 13% from Feb 12
BAKU. Feb 12 (Interfax) - The Central Bank of Azerbaijan (CBA) has reduced its discount rate from 15% to 13% effective February 12, Central Bank Governor Elman Rustamov said in a press conference on Monday.
"Azerbaijan's annual inflation level has fallen into the single digits. In view of this and a number of other factors, the Management Board of the Central Bank of Azerbaijan has on Monday made the decision to reduce the discount rate from 15% to 13%," Rustamov said.
Furthermore, the lower limit of the interest rate corridor has been reduced from 10% to 8%, with the upper limit cut from 18% to 16%, he said.
According to the CBA head, there is potential for further discount rate reduction. "This is possible if positive trends such as low inflation and positive foreign trade dynamics continue," he said.
The discount rate in Azerbaijan had not been reviewed since September 15, 2016. The Central Bank had hoped to lower the rate in 2017, but was unable to do so because of high annual average inflation of 12.9%.
The rate will again be discussed at a meeting in April, according to a CBA statement.
"The CBA will continue monitoring the situation in the economy and in financial markets and acting within the scope of the instruments available. The parameters of the interest rate corridor will next be discussed at the meeting in April," the statement said.
The CBA believes that 2018 will see the country's positive economic growth trend continue. "In 2017, non-oil GDP grew 2.7% [overall GDP was up 0.1%]. Economic growth was driven by growth in state investment expenditures and non-oil exports," the statement said.
According to CBA data, an improvement in the external market situation led to a 10-fold increase in the 2017 foreign trade surplus compared with 2016, to $5 billion. Moreover, exports were up 52%, including a 23% rise in non-oil exports.
"As a result, Azerbaijan's foreign exchange reserves grew 11% in 2017. According to forecasts, positive external market trends will continue in 2018," the CBA said.