OREANDA-NEWS. March 2, 2009. The National Bank of Azerbaijan (NBA) has narrowed a percentage corridor applied at transaction at open market.

The NBA Chairman Elman Rustamov said that an upper limit of the percentage corridor is being reduced from 10% to 8% saving a lower limit at the level of 3%. The decision was made by the NBA administration on February 27.

According to the same decision, starting from March 1 the NBA interest rate will be decreased to 3% (from current 5%) and a compulsory reserving norm (both in domestic and foreign currencies) to 0.5%.

“The rate reduction is aimed at reacting upon deflation process and assistance to the banks,” Rustamov said. He also noted that the NBA intends to provide economy with extra liquidity.

“Additional liquidity will make \\$120 million that is more than a half of the foreign debt paid off by banks,” Rustamov said.

NB informs that in compliance with the NB Board’s decision starting from February 2 the NB interest rate will be cut from 8% to 5% per annum.

“At the same time the top level of “percentage corridor” applied by the Bank in the open market will be cut from 13% to 10%, and the low level from 6% to 3% per annum,” it was reported.

In October 2008 the NB started successive cutting of interest rate.

Following the NB decision from October 14 of 2008 the rate was decreased from 15% to 12% per annum and percentage corridor from 20%-5% to 17%-3%. Then since October 31 the NB rate was cut from 12% to 10% per annum with change of percentage corridor from 17%-3% to 15%-1%, and at last from December 1 from 10% to 8% per annum while percentage corridor declined to 13%-6%.

In 2007 the NB, on the contrary, was increasing the rate to raid inflation overheat of economy in connection with active investments and high world oil prices.

The NB rate of 9.5% kept since July 2006, but since April 2007 grew up to 12%, and since June up to 13%. Since April 10, 2008 it grew up to 14% and since June 9, 2008 up to 15%.