The International Monetary Fund (IMF) recommends that the Central Bank of Azerbaijan (CBA) consider raising the discount rate if inflationary pressures from imported food prices continue to strengthen.
According to IMF experts, maintaining the current discount rate aligns with the expected normalization of domestic demand. However, rising external uncertainty and the estimated neutral rate of 2.25% should be taken into account.
The Fund notes that the projected rise in total inflation in 2026 is primarily due to external factors affecting food prices. A sharp increase in global commodity prices amid the Middle East conflict could push inflation significantly above the CBA's target range.
IMF forecasts average annual inflation in Azerbaijan at 6% in 2026, 4.2% in 2027, and 4.1% in 2028, remaining at 4% during 2029-2031.
