Finance

Finance

Central Bank keeps discount rate steady, narrows interest rate corridor on liquidity operations

03 May 2016 16:39 (UTC +04:00)

The Central Bank of Azerbaijan told APA-Economics that the actual level of the inflation and treatment of main cyclic and structural factors affecting the inflation as a result of the recent tends observed in the national economy and business activity and changes in volume and structure of the total demand, as well as stabilization of inflationary expectations stipulate the reduction of higher limit of the interest rate corridor. At the same time, the tends observed in the interest rate in the yield on government securities, as well as interbank monetary market also form a basis for this.

On the other hand, in order to achieve considered growth rates of the money supply, the Central Bank of Azerbaijan also plans to conduct sterilization operations of liquidity in a relevant amount in accordance with the monetary program agreed with the relevant economic organizations within the macroeconomic and financial stabilization policy. This urges the Central Bank to raise the lower limit of the corridor. Conduction of the sterilization operations with raising the lower limit of the interest rate corridor is also significant from the standpoint of supporting of balance in the currency market and increase of confidence in manat by increasing the attractiveness of charges in the national currency.

Taking into account these all, as well as duties arising from the monetary, fiscal and financial stability policies planned to be conducted in the mode of close coordination for the current year, the Central Bank of Azerbaijan’s Board of Directors passed a decision on May 3, 2016 to raise the lower limit of the interest rate corridor from 2% to 4%, and reduce the higher limit from 17% to 15% keeping the discount rate steady at 7%.