The Central Bank of Azerbaijan held the refinancing rate at 6.5% and the interest-rate corridor at 5.5%-7.5%, balancing an upward inflation forecast that warrants tighter policy against excess foreign-exchange supply that supports a softer stance. This followed three 25-basis-point cuts from 7.25% in July and December 2025 and February 2026. Short-term unsecured money-market rates remained within the corridor, with AZIR averaging 6.39% in the latest part of July, while the central bank continued to manage surplus liquidity mainly through seven-day deposit operations. Annual inflation rose to 5.8% in June but remained within the 4%±2 percentage-point target band, and the central bank projected 6.1% at end-2026 and 5.8% at end-2027, with domestic demand unlikely to generate inflationary pressure under current fiscal and monetary policies. Foreign-exchange supply significantly exceeded demand, prompting purchase-oriented intervention and lifting reserves to USD 13.8 billion, while the current-account surplus forecasts for 2026 and 2027 were revised upward. The central bank cited risks from geopolitical uncertainty, higher global energy and food prices and imported inflation, and said future corridor decisions would consider the inflation outlook, macroeconomic indicators, foreign-exchange market conditions, banking-sector liquidity and pressures for manat appreciation.
Central Bank of Azerbaijan2026-07-31
Central Bank of Azerbaijan Holds Refinancing Rate at 6.5%
The Central Bank of Azerbaijan held the refinancing rate at 6.5% and the interest-rate corridor at 5.5%-7.5%, balancing a higher inflation outlook against excess foreign-exchange supply. Annual inflation reached 5.8% in June, while purchase-oriented intervention lifted reserves to USD 13.8 billion.