According to the Central Bank of Azerbaijan (CBA), anti-inflationary monetary policy and reforms are continuing to achieve the target. Further decisions on monetary policy will be made taking into account internal and external inflation risks and the actual and expected deviation of inflation from the target value.

"The dynamics of the parameters of the interest rate corridor, the appropriate application of monetary policy tools, and changes in macroprudential requirements limit the excessive growth of aggregate demand," the CBA said in a statement.

According to the CBA, average interest rates on money market operations continue to react to changes in the interest rate corridor. The AZIR (Azerbaijan Interbank Rate) index, reflecting the weighted average interest rate of unsecured transactions concluded between banks in the national currency, shows an upward trajectory.

"The one-day AZIR index has grown by 1.87 percentage points and the weekly AZIR index by 1.04 percentage points since the beginning of this year. In order to regulate the money supply more effectively, further limit the concentration of liquidity in the banking system, and support the trends of de-dollarization, the rule of differentiation of reserve requirements was revised," the CBA said in a statement.

According to the CBA, the one-day AZIR index has grown by 1.87 percentage points and the weekly AZIR index by 1.04 percentage points since the beginning of this year. In order to regulate the money supply more effectively, further limit the concentration of liquidity in the banking system, and support the trends of de-dollarization, the rule of differentiation of reserve requirements was revised.

"It was decided that from July 2023 all banks should calculate obligatory reserves according to the new standards, and from the next preventive period (August 15, 2023) to maintain compulsory reserves according to the new standards. Differential application of obligatory reserve rules depending on the size of deposits by legal entities will reduce the concentration of liquidity and sterilization of additional funds," the CBA said in a statement.

To date, the inflation target in Azerbaijan is four percent.

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