The Central Bank of the Republic of Azerbaijan cut its discount rate by 0.25 percentage points to 6.5% at its February 2026 meeting, the lowest since September 2021, continuing its gradual easing cycle as inflation remains within the 4±2% target range. The decision also adjusted the interest rate corridor accordingly, setting the lower limit at 5.5% and the upper at 7.5%, signaling policymakers’ intent to maintain adequate liquidity. The move reflects the central bank’s view that price pressures are easing, with a recent downward trend in inflation and core inflation close to target, alongside stability in foreign exchange and rising FX reserves. Officials noted that inflation risks have not changed significantly, with external price transmission and domestic cost factors remaining the main variables to watch. Going forward, the Bank reaffirmed its data-dependent stance, emphasizing readiness to modify policy if actual or forecast inflation deviates from its baseline outlook.
