Central Bank of the Republic of Azerbaijan holds policy rate at 6.5% as inflation remains within target

The Central Bank of the Republic of Azerbaijan kept its policy rate at 6.5%, with the interest rate corridor’s lower and upper bounds unchanged at 5% and 7.5%, respectively. Annual inflation remained within the 2% to 6% target range and followed the baseline forecast. Inflation eased to 5.5% in September 2026, down 0.2 percentage points from August, while annual core inflation stood at 4.9%. The updated baseline forecasts put inflation at 5.9% at the end of both 2026 and 2027. Compared with July, the projection was lowered by 0.2 percentage points for 2026 and raised by 0.1 percentage points for 2027. These forecasts assume unchanged government-regulated prices and tariffs. The main inflation risks remain external, particularly higher global energy and food prices feeding through trading partners into domestic prices. Domestic demand is not expected to add materially to inflation pressures under current fiscal and monetary policies. Foreign currency supply continued to exceed demand, prompting central bank purchases that helped increase foreign exchange reserves by 33.4% to USD 15.4 billion in the first nine months of 2026. The bank also raised its current account surplus forecasts to USD 8.5 billion for 2026 and USD 5.4 billion for 2027, reflecting high prices for key exports and continued growth in exports outside the oil and gas sector. Domestic banking liquidity remained abundant: the structural liquidity surplus, excluding required reserves, reached AZN 6.2 billion at the end of September, contributing to downward pressure on unsecured money market rates. The next interest rate corridor decision will be disclosed on Dec. 23, 2026.