Azerbaijani Banks to increase interest rate to 3%

The Central Bank of Azerbaijan's (CBA) decision to increase the Bank's base interest rate up to 3% from November 1 is a timely response to changes in the economic situation in the world, the President of the Azerbaijani Association of Banks, Eldar Ismailov, told Trend.

"Despite the fact that the world crisis is not yet over, there are some positive trends. The CBA promptly responded to these changes and raised interest rates. I think it will have a positive impact on the banking sector," he said.

Yesterday, the CBA announced the rate would rise to 3% from November 1. At the same time, compulsory reservation on the foreign liabilities of the banks was set at 0.5 percent to regulate the external monetary factors of growth of money supply.

The increase in the balance of payments and foreign reserves and the expansion of the money supply due to Azerbaijan's internal and external sources have been observed since early 2010.

Earlier, according to the CBA Board's decision dated May 25, 2010, the rate was reduced by 1% to 2%. Last year, the rate was reduced in three stages from 15% to 8%.

Azerbaijan's monetary policy allowed it to confront the global financial crisis and support the country's banking system, namely solving problems with liquidity and providing the banks with access to additional resources, while there were shortages of liquidity on the world markets.