OREANDA-NEWS. The Central Bank of Azerbaijan is carrying on with efforts to maintain macroeconomic stability in line with its mandate.

The flexible exchange rate regime introduced by the Central Bank allowed the exchange rate of the national currency to rest upon macroeconomic fundamentals. To boost confidence in the national currency, promote deposits in Manat and enable the improvement of monetary policy tools commensurate with the money market conjuncture the Central Bank made critical corrections to the parameters of monetary policy tools, including the interest rate corridor. To attain the implied growth rate of money supply the Central Bank bolstered liquidity sterilizations giving rise to deposit operations to attract free funds in the national currency in June.

Given macroeconomic stability targets for the current year and the medium run, macroeconomic forecasts, inflation expectations, balance of payments related trends, as well as the situation in the financial market, the Management Board of the Central Bank having reviewed the parameters of monetary policy tools ex novo decided to keep the floor and the ceiling of the interest rate corridor on liquidity operations unchanged meanwhile moving the refinancing rate up to 9.5% from 8 August 2016 onward.

The refinancing rate is raised to allow the money market establish real interest rates so that to stimulate savings in the national currency in parallel increasing the confidence in Manat. This effort will also make Central Bank’s sterilizations more attractive.