By Central Bank News
The central bank of Azerbaijan cut its benchmark refinancing rate by 25 basis points to 5.0 percent to stimulate economic growth as inflation was at an “optimal level.”
The Central Bank of the Republic of Azerbaijan said the exchange rate of the manat currency had remained stable, money supply was in line with the bank’s inflation target and inflation was at a single-digit level with the average annual inflation rate far below that of its trading partners and this tended to reduce average interest rates on loans.
“To enable interest rates to decline further and support economic growth in the non-oil sector given the optimum level of inflation, the management board of the central bank took the decision to shift the refinancing rate to 5% from 5.25% from December 10 2012 onward,” the central bank said in a statement.
Azerbaijan’s inflation rate fell to 1.3 percent in October from September, a new low for the year. The central bank’s main target for 2012 was single digit inflation and inflation has been declining since hitting a 2011 high of 9.6 percent in March 2011.
The central bank has held its rate steady since June 2011 when it was raised to reduce inflation.
Azerbaijan’s economy has been relatively unaffected by the global financial crises and the bank said the country’s non-oil economy was driving the country’s growth with a 10.4 percent rise in the first 10 months of the year. Internal and external demand was supporting growth and employment.