- Decision
- Maintain
- Rate change
- 0 bps
- refinancing rate
- 7.25%
The Management Board of the Central Bank of the Republic of Azerbaijan on 23 April 2025 kept the refinancing rate at 7.25 % and left the interest-rate corridor unchanged at 6.25–8.25 %, judging that actual and projected inflation remain within the 4 ± 2 % target range amid manageable domestic conditions and a more volatile external environment. The refinancing rate has been steady at 7.25 % since at least January 2025. Short-term money-market rates continue to trade inside the corridor, with the average 1-day AZIR easing to 7.21 % in the second ten-day period of April following a Finance Ministry liquidity-boosting deposit auction. Twelve-month headline inflation was 5.9 % in March, core inflation 4.5 %, and updated forecasts point to 5.3 % in 2025 and 4.3 % in 2026. External accounts are solid, with a Q1 2025 trade surplus and a full-year current-account surplus expected, while the non-oil-gas nominal effective manat appreciated 1.8 % year on year. The central bank warned that heightened global commodity-price volatility linked to trade wars and geopolitical tensions poses upside risks, though domestic cost and demand pressures are deemed limited. Future corridor moves will depend on inflation outcomes and risk dynamics, and the next rate decision will be announced on 11 June 2025.
Rate evolution
Over the period, the Central Bank of the Republic of Azerbaijan eased the policy rate by 75 basis points from 7.25% to 6.5%, with an initial cut, a pause through October 2025, further easing around year-end and in February 2026, and holds in the policy rate thereafter through September 2026. Early decisions reflected inflation staying on forecast and within the 4±2% target range, foreign exchange stability, favorable external balances and policy transmission, while uncertainty centered on global trade volatility, import prices, the nominal effective exchange rate and domestic cost pressures or excess demand, and the December and February cuts followed easing upside risks and a lower 2026 inflation forecast, though geopolitical tensions and trade uncertainty kept external risks elevated.
The Central Bank kept the interest rate corridor unchanged on June 24 and July 31, 2026, as inflation remained within the target range, and in July judged that an upward revision to the inflation forecast called for tighter policy while a significant excess of foreign exchange supply over demand supported softer policy, warranting unchanged parameters. It forecast inflation at 6.1% at end-2026, 6% in June 2027 and 5.8% at end-2027. On September 23, the Central Bank held the refinancing rate at 6.5% and the corridor ceiling at 7.5% but widened the corridor by cutting the floor by 0.5 percentage point to 5%, effective September 24, based on actual and forecast inflation, foreign exchange developments, banking sector liquidity and global monetary conditions. With annual inflation at 5.7% in August, 0.1 percentage point lower than in July and broadly in line with the baseline forecast, the medium-term target-band outlook remained unchanged, while future corridor decisions would reflect the inflation outlook, key macroeconomic indicators, foreign exchange developments and banking sector liquidity, with risks from geopolitical uncertainty, higher energy and food prices, pass-through from major trading partners and the nominal effective exchange rate of the manat.