According to the CBA data, the upper limit of the interest rate corridor was lowered from 9.5 percent to 9 percent and the lower limit from 7 percent to 6.5 percent.
"This decision was made in light of the presence of actual and forecast inflation in the target corridor (42%), the stabilization of inflation expectations, and excess supply in the foreign exchange market. The annual inflation rate has declined quicker than predicted since the last Governing Council monetary policy meeting. In November 2023, 12-month inflation was 2.6 percent. This is the third month in a row that annual inflation has remained within the target range. Monthly price trends continue to fall from a year ago. In November, the consumer price index fell by 0.2 percent, which is unusual for this time of year," the CBA said.
Annual inflation declined due to the impact of external and internal factors.
"The slowdown in foreign-origin inflation was mainly due to the decline in global economic activity and tight monetary policy pursued in most countries. The continued decline in global commodity prices, especially energy and food prices, has reduced inflationary imports into the country. According to the World Bank, the commodity price index declined by 18.3 percent in November on an annualized basis, with energy prices down 23.9 percent and non-energy prices down 4.6 percent. According to the UN Food and Agriculture Organization (FAO), the food price index decreased by 10.7 percent in November on a year-on-year basis," the Central Bank said.
The CBA believes that the strengthening of the nominal effective exchange rate of the manat by 19.5 percent from January through November 2023 played an important role in reducing imported inflation under the conditions of maintaining balance in the foreign exchange market.
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