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24 June 2026, Baku: The Management Board of the Central Bank of the Republic of Azerbaijan decided to keep all parameters of the interest rate corridor unchanged. The decision was made considering the alignment of actual inflation and forecasted inflation with the target range, the risks arising from heightened geopolitical tensions, the global financial conditions and the domestic macroeconomic environment.
Annual inflation is within the target range and moving in line with the forecast trajectory under the baseline scenario. In May 2026, 12-month inflation stood at 5.6%. Annual price growth amounted to 6.6% for food, alcoholic beverages and tobacco products, 5.7% for paid services and 3.9% for non-food products. Annual core inflation stood at 5.6%.
Over the past period of current year, supply exceeded demand in the foreign exchange market. This has manifested itself in both cash and non-cash segments. Over the first 5 months of 2026 cash foreign currency purchases by exchange points exceeded sales by $311M. In May 2026, the dollarization level of resident individuals’ deposits decreased by 2.8 percentage points over recent 12 months to 27%. The volume of remittances received in January-May increased by 28.8% compared to the same period last year, amounting to $560.1M.
In the context of a significant decrease in banks' demand at currency auctions, the Central Bank conducted a purchase intervention. In the first 5 months of the current year, the Central Bank's foreign exchange reserves increased by $1.2B, or 10.4%, reaching $12.7B.
The external sector indicators remain favorable. According to the State Customs Committee, the trade surplus amounted to $7.2B in January-May 2026. The Central Bank revised upward its forecast for the current account surplus by the end of 2026, citing rising global energy prices in recent months and continued positive trends in non-oil and gas exports.
Monetary policy tools are applied in response to financial market developments and liquidity position of the banking system. Short-term interest rates in the unsecured money market move within the Central Bank’s interest rate corridor, closely aligned with the refinancing rate. Thus, the average daily level of the AZIR index has been in the range of 6.43-6.44% since the end of March 2026. Under conditions of excess liquidity, the Central Bank primarily employs 7-day deposit operations to maintain the AZIR at a level close to the refinancing rate. As of the end of May, 7-day deposit operations accounted for 88.7% of the sterilization portfolio for open market operations. Additionally, regular auctions for the placement of Central Bank notes are held. In May and June, the yield on notes of all maturities tended to decrease. In the rest of the year, excess liquidity in the banking sector is expected to increase further.
Annual inflation is projected to remain within the target range in the current and next year. However, external cost drivers of inflation are on the rise.
Since the last meeting, changes in the global economic environment have increased the likelihood of external inflation risks. Rising world food and fertilizer prices, transport and logistics costs, inflation imports from trading partner countries, and a slowing nominal effective exchange rate appreciation are among the factors that may increase external inflation risks in a rapidly changing global environment. In-depth analyses are being conducted to determine the sustainability of these factors. However, in the domestic environment, the likelihood of excessive expansion of aggregate demand against the backdrop of current fiscal and monetary policies is low.
During the remainder of the current year, further decisions regarding the parameters of the interest rate corridor will be made, taking into account the inflation forecast and macroeconomic indicator dynamics. Due to uncertainties in the global environment, forecasts of macroeconomic indicators under several scenarios will be reviewed. While making decisions on the parameters of the interest rate corridor, the dynamics of liquidity in the banking sector and its direct and indirect effects will also be taken into account.
The schedule for the public disclosure of monetary policy decisions in 2026 has been changed. Consequently, the date of the public disclosure of the next decision on the parameters of the interest rate corridor and related press conference date has been changed from August 5, 2026, to July 31. A meeting with experts is also scheduled for the same day.
24.06.2026