2 May 2017, Baku: The CBA Management Board held its next meeting on 1 May 2017 to discuss recent macroeconomic processes and review the status of implementation of macroeconomic stability oriented measures and main macroeconomic risks.

The balance of payments (BoP) has been improving in the recent year. Relatively favorable oil prices, higher exports, including higher non-oil exports, and less quarterly imports contributed to the current account of BoP. The foreign trade balance and the current operations account are expected to have positive surplus as of end-2017.

Macroeconomic stability has been driven by consistent implementation of the actions plan adopted on the macroeconomic stability frame and conservative anti-inflationary monetary policy over the past period of the current year.

Positive trends in the BoP and broader currency supply channels on this backdrop have fuelled to strengthening of the exchange rate of manat over recent months. Although the CBA considerably contained FX market interventions, the exchange rate of manat became less volatile with parallel minimum spread between buying and selling rates.

Inflationary expectations are abating in response to the stronger national currency and domestic demand factors. Recent surveys suggest that, inflation expectations on population’s all income groups are going down. Over recent 3 months inflation rates have been lower than in January.

The money program is being more flexibly implemented given the existing situation and new macroeconomic trends. The present situation has allowed to relatively increase money supply without prejudice to the macroeconomic stability.

In light of the specifics and timing of pass-through of the stabilizing measures to lower inflation and changes to the macroeconomic risk mapping the CBAManagement Board decided to leave interest rate corridor parameters and the refinancing rate unchanged.