Azerbaijan Holds Key Rate at 6.5%, Widens Rate Corridor

The Central Bank of the Republic of Azerbaijan kept its discount rate unchanged at 6.5% for a fourth consecutive meeting on September 23, 2026, maintaining borrowing costs at the lowest level since September 2021. However, the lower bound of its interest rate corridor was cut by 0.5 percentage points to 5%, while the upper bound remained at 7.5%. The move widened the corridor to encourage interbank trading amid excess liquidity, while keeping the key rate and upper bound unchanged to stabilize inflation expectations. Annual inflation eased to 5.7% in August from 5.8% in July, remaining within the target range, while core inflation stood at 5.1%. Foreign currency supply continued to exceed demand, helping reserves rise 32.9% to a record $15.3 billion in the first eight months of 2026. The bank maintained that global energy and food prices remain key upside risks to inflation, while future decisions will depend on inflation, foreign exchange market conditions, and banking liquidity.

The Central Bank of the Republic of Azerbaijan kept its discount rate unchanged at 6.5% for a fourth consecutive meeting in July 2026, maintaining borrowing costs at the lowest level since September 2021. The interest rate corridor was also left intact, with the lower bound at 5.5% and the upper bound at 7.5%, as policymakers judged inflation risks to be broadly balanced. Annual inflation stood at 5.8% in June from a 5.6% increase in the previous month, remaining within the bank's target range, while core inflation stood at 5.5%. The central bank noted that foreign exchange supply continued to significantly exceed demand, helping lift international reserves by 19.5% to $13.8 billion in the first half of the year. It reiterated that geopolitical tensions and higher global energy and food prices remain key upside risks to inflation, with future policy decisions guided by inflation forecasts, macroeconomic conditions, foreign exchange market developments, and banking sector liquidity.

The Central Bank of the Republic of Azerbaijan kept its discount rate unchanged at 6.5% for a third consecutive meeting in June 2026, maintaining borrowing costs at the lowest level since September 2021. The interest rate corridor was also left intact, with the lower bound at 5.5% and the upper bound at 7.5%, as policymakers judged inflation risks to be broadly balanced. Annual inflation stood at 5.6% in May, while non-food inflation stayed relatively subdued. The central bank noted favorable foreign exchange market conditions, declining dollarization, and strong foreign currency inflows. External conditions also remained supportive, helped by higher energy prices and a stronger trade balance. However, policymakers warned that global inflation risks, including higher food, fertilizer, and transportation costs, could affect domestic prices. The bank reiterated that future policy decisions will depend on inflation dynamics, external developments, and overall macroeconomic conditions.