The Central Bank of Azerbaijan (CBA) will prioritize macroeconomic
stability in 2011 to cope with the global economic recession, Trend
reports.
The inflation rate is expected to stay below 10%. The currency
exchange rate of the Azerbaijani manat will be regulated based on
supply and demand. There will be no sharp volatility. The Central Bank
will switch to a flexible exchange rate in order to target inflation
more efficiently.
The rate corridor, including the inflation accounting rate, will be
regulated depending on the economic cycle and the situation on the
financial markets. Liquidity of the banking system will mainly be
controlled by short-term operations. Long-term operations will be used
if necessary. The obligatory reserve mechanism will be improved, with
a level corresponding to the inflow to the banking sector.
The institutional basis will still be the focus of attention. The
basis for economic research and forecasting will be improved.
A new macroeconomic model will be developed for studying various
economic shocks, taking into account local and methodological
challenges. This will allow the Central Bank to make better forecasts.
