BAKU, Azerbaijan - The Central Bank of Azerbaijan kept its refinancing rate unchanged at 6.5% on Oct. 29 and maintained the lower and upper bounds of its interest-rate corridor at 5% and 7.5%, respectively.
The bank said the decision reflected current and projected headline and core inflation, inflation expectations, conditions in the foreign-exchange market and the balance of external and domestic risks.
Inflation Forecast Revised
The central bank revised its baseline inflation forecast to 5.9% for both 2026 and 2027, assuming that regulated prices and tariffs remain unchanged. Its previous forecasts were 6.1% for 2026 and 5.8% for 2027.
Annual inflation slowed to 5.5% in September from 5.7% in August. Food, alcoholic beverages and tobacco prices rose 6.9% from a year earlier, paid services increased 5.1% and non-food goods rose 3.6%. Core inflation was 4.9%.
The bank’s inflation target is 4%, with a tolerance band of 2 percentage points in either direction.
Currency Market and Risks
In the first nine months of the year, exchange offices bought $759 million more in cash foreign currency from customers than they sold to the public.
The dollarization rate of deposits held by resident individuals fell 3.3 percentage points from a year earlier to 25.7% in September.
The central bank cited geopolitical tensions, possible increases in global energy and food prices, and imported inflation through Azerbaijan’s trading partners among the main risks to the outlook.
The next decision on the interest-rate corridor is scheduled for Dec. 23, 2026.
Sources: Central Bank of Azerbaijan; Vesti Baku.