According to the baseline scenario of the Central Bank of Azerbaijan (CBA), annual inflation is expected to remain within the target range by the end of 2025 and in 2026, APA-Economics reports.
This was stated in the CBA’s decision regarding the interest rate. According to the October forecasts under the baseline scenario, annual inflation is expected to be 6% in 2025 and 5.7% in 2026.
The upward revision of the inflation forecast is mainly related to supply factors.
"After the last meeting, there have been no significant changes in the balance of inflation risks. Instability in the global trade environment continues to cause volatility in commodity and financial markets. The impact of import prices—which are the main source of external risk—on domestic inflation is linked to inflationary processes in trading partner countries and the dynamics of the nominal effective exchange rate.
As for domestic risk factors, it should be noted that updated forecasts indicate that inflation in the coming period will be shaped mainly by supply–cost factors. The initial parameters of the state budget for 2026 and the slowdown in the annual growth of credit issuance reduce the risk of excessive aggregate demand growth," the CBA added.
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