Azerbaijan's Central Bank to Maintain Prudent Monetary Policy Amid Inflationary Pressures

Strategic Insights -

The Central Bank of Azerbaijan is set to continue its data-driven monetary policy in the face of rising inflation, according to a forecast by Fitch Solutions. The bank will not rush to reduce interest rates, as economic growth weakens and price increases stabilize. Instead, it may gradually ease its policy if economic growth recovers and price pressures decrease. Fitch Solutions has predicted a discount rate of 6.75% in 2025 and 6.25% in 2026, lower than the average rate observed in 2020-2024. Inflation is expected to rise to 6% by the end of 2025 due to rising food prices and service sector tariffs, but decrease in 2026.

Key Takeaways:

  • The Central Bank of Azerbaijan will maintain its prudent and data-based monetary policy for the rest of 2025 and 2026 in response to inflationary pressures.
  • The Central Bank will not reduce interest rates as economic growth weakens and price increases stabilize, but may ease its policy if economic growth recovers.
  • Fitch Solutions has forecast the discount rate at 6.75% in 2025 and 6.25% in 2026, lower than the average rate observed in 2020-2024.
  • The forecast is based on the weakening of economic activity due to falling global oil prices and persistent price pressures.
  • The main drivers of inflation are rising food prices and tariff adjustments in the service sector.
  • The Central Bank aims to maintain the 2-6 percent inflation target range and will not lower the policy rate until price stability is fully restored.

Statistics:

  • Discount rate forecast by Fitch Solutions: 6.75% in 2025, 6.25% in 2026.
  • Average discount rate observed in 2020-2024: [Not specified in the original text].
  • Inflation forecast in 2025: 6%.
  • Inflation forecast in 2026: [Not specified in the original text].
  • Current policy rate: 7.00%.
  • Date of next policy rate decision: October 22, 2025.
  • Timeframe for maintaining the 2-6 percent inflation target range: [Not specified in the original text].

Sources:

  • Azeri-Press news agency (14 Oct 2025)
  • Fitch Solutions forecast, cited in APA-Economics report.