Economist Emin Gurbanov, in an interview with Azernews, associated this decision with the surge in global inflation following the pandemic, viewing it as a necessary measure to manage the prevailing economic conditions. This trend of cutting interest rates is not only observed in Azerbaijan but also across European nations.
Despite high inflation rates in the past, Gurbanov predicts a 3-5% drop in the upcoming years, echoing forecasts made by local and global experts from organizations such as the World Bank and International Monetary Fund. He suggests raising interest rates as a means to stimulate the banking sector.
Gurbanov remains optimistic about the future of the Azerbaijani manat, dismissing significant inflation threats. To tackle high inflation, central banks often increase interest rates to curb spending. A surge in goods due to enhanced production and imports can lead to price reductions.
The Central Bank of Turkiye frequently reduces interest rates to encourage economic growth and promote borrowing and spending. This strategy led to a period of devaluation of the lira, which was eventually stabilized through measures like increasing interest rates, implementing currency controls, or seeking foreign aid.
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Source: Economy - investing.com
