Central Bank: Eased monetary conditions affects interest rate cuts


January 22, Fineko/abc.az. Some time ago at a meeting of entrepreneurs with Central Bank’s chairman Elman Rustamov the businessmen expressed their dissatisfaction with high interests of bank loans. More than a week has passed since this meeting.

Our portal applied to the CBA with a question what kind of work entrepreneurs are doing on the matter.

In response to the inquiry of ABC.AZ the country’s main bank replied that with the expansion of non-cash payments in Azerbaijan, the main factors determining the dynamics of interest rates are the increase in resource sources of lending, the sustainable development of all segments of financial markets, and the optimization of operating expenses at banks.

The CBA stressed that at the same time the easing of monetary conditions by the Central Bank in recent years also has had downward effect on interest rates: "Since 2018 the discount rate has been gradually cut from 15% to 7.5%.

The continued growth of the money supply during this period also contributed to significant easing of monetary conditions. The easing of monetary conditions is accompanied by decrease in the average interest on new deposits in manats and new loans in manats. Interests on securities are also reduced in parallel with the CBA’s interest rate corridor. Depending on the extent to which the inflation target is achieved, further monetary easing may affect the reduction of interest rates."