Azerbaijan's central bank keeps key rate unchanged at 15%

By bne IntelliNews August 2, 2017

Azerbaijan's central bank has kept its key rate unchanged at 15% following its monetary policy meeting on August 1, the regulator reported.

The justification for its decision, it said, is that annual consumer price inflation stood at a high 13.9% in the first half of the year, and that "short- and medium-term factors of risk for inflation have not been neutralised completely". The regulator, however, said that it expected inflation to come down in the second half of the year.

Monetary instability has plagued Baku since February 2015, when declining oil revenues and pressure from falling currencies in Russia and Central Asia prompted the regulator to drop the Azerbaijani manat's peg to the dollar to enable it to save its fast declining foreign exchange reserves. The currency has depreciated by more than 50% since, leading to skyrocketing prices.

Annual inflation stood at 12.6% in 2016, climbing to 13.9% in the first half of 2017.

In response, the regulator increased its key rate abruptly from 3% in February 2016 to 15% in September in order to stave off inflation. 

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