The Management Board of the Central Bank of the Republic of Azerbaijan cut all interest-rate-corridor parameters by 25 bp, lowering the refinancing rate to 6.5 percent with a 5.5–7.5 percent corridor, citing falling inflation that remains within the 4 ± 2 percent target band and a still-benign domestic and external backdrop. After two 25 bp reductions in July and December 2025, the latest move extends last year’s 50 bp easing cycle. Interbank rates continue to trade close to the policy rate—AZIR averaged 6.73 percent in December and 6.7 percent in January—supported by weekly open-market operations that offset liquidity swings. Twelve-month headline inflation eased to 5.2 percent in December, with core at 4.8 percent; under the baseline scenario, the Central Bank now projects 5.5 percent inflation for 2026 (revised down) and 4.0 percent for 2027. On the external side, stable foreign-exchange conditions persist: cash FX purchases exceeded sales by USD 423 million in 2025, household deposit dollarisation fell 2.6 pp to 28 percent, and reserves rose 5.1 percent to USD 11.5 billion amid a USD 0.7 billion goods-trade surplus. The Bank notes that favourable current-account prospects should continue through 2027 even as global geopolitical tensions and commodity-price uncertainty keep external inflation risks elevated. Future policy decisions will hinge on the path of actual and forecast inflation, with the Central Bank ready to use all available tools to safeguard price stability.
Central Bank of Azerbaijan 2026-02-04
Azerbaijan Central Bank cuts refinancing rate 25 bp to 6.5 %
The Central Bank of the Republic of Azerbaijan lowered all corridor parameters by 25 bp, cutting the refinancing rate to 6.5 % (corridor 5.5–7.5 %) after inflation fell to 5.2 %, within the 4 ± 2 pp target band. The move extends 2025’s 50 bp easing cycle and future action will depend on inflation projections.