Azerbaijan Leaves Key Rate Unchanged

The Central Bank of the Republic of Azerbaijan cut its discount rate by 0.25 percentage points to 6.5% at its February 2026 meeting, the lowest since September 2021, continuing its gradual easing cycle as inflation remains within the 4±2% target range. The decision also adjusted the interest rate corridor accordingly, setting the lower limit at 5.5% and the upper at 7.5%, signaling policymakers’ intent to maintain adequate liquidity. The move reflects the central bank’s view that price pressures are easing, with a recent downward trend in inflation and core inflation close to target, alongside stability in foreign exchange and rising FX reserves. Officials noted that inflation risks have not changed significantly, with external price transmission and domestic cost factors remaining the main variables to watch. Going forward, the Bank reaffirmed its data-dependent stance, emphasizing readiness to modify policy if actual or forecast inflation deviates from its baseline outlook.

The Central Bank of the Republic of Azerbaijan lowered its refinancing rate by 0.25 percentage points to 6.75% at its December 2025 meeting, continuing its gradual easing cycle to support domestic economic conditions. The decision also adjusted the interest rate corridor accordingly, setting the lower limit at 5.75% and the upper at 7.75%, signaling policymakers’ intent to maintain adequate liquidity while balancing inflation dynamics. The move reflects the central bank’s view that price pressures remain contained, supported by stable demand trends and favorable developments in global commodity markets. Officials noted that inflation risks are broadly balanced, with external volatility and domestic activity remaining the main variables to watch. Going forward, the Bank reaffirmed its data-dependent stance, emphasizing readiness to modify policy if new economic indicators diverge from its baseline inflation projections.

The Central Bank of the Republic of Azerbaijan kept its refinancing rate unchanged at 7% during its October 2025 meeting, maintaining borrowing costs at their lowest level since late 2021. The interest rate corridor was also left steady, with the upper bound at 8% and the lower bound at 6%. Policymakers said the decision reflects stable inflation trends, balanced external and internal conditions, and the need to preserve financial stability while supporting economic activity. Inflation remains within the 4±2% target range, supported by stable food prices and moderate domestic demand. The Bank noted that risks to inflation are broadly balanced, citing movements in global commodity markets and domestic demand as key factors. Looking ahead, it reaffirmed its data-driven approach, emphasizing readiness to adjust policy if inflation deviates from its forecast path.