Central Banks Adjust Interest Rates Amid Persistent Inflation

Global banks are adjusting their interest rates in response to persistent inflation, which has been impacting corporate profit margins and leading to declines in stock prices. The Central Bank of Azerbaijan has joined this trend by lowering its interest rates, raising concerns about potential risks of devaluation for the Azerbaijani manat.

Economist Emin Gurbanov shared his insights in an interview, linking this decision to the rise in global inflation following the pandemic and viewing it as a necessary step to navigate current economic challenges. This pattern of reducing interest rates is evident not only in Azerbaijan but also in various European countries.

Although inflation rates have been elevated recently, Gurbanov anticipates a decrease of 3-5% in the coming years, aligning with predictions made by local and international experts, including those from major financial institutions. He advocates for an increase in interest rates as a way to stimulate the banking sector.

Gurbanov expresses optimism regarding the future of the Azerbaijani manat, downplaying significant inflation threats. To control rising inflation, central banks typically raise interest rates to limit spending. An increase in goods availability due to improved production and imports may also contribute to price reductions.

In Turkiye, the Central Bank often lowers interest rates to foster economic growth and encourage borrowing and spending. This approach initially resulted in the devaluation of the lira, which was later stabilized through strategies such as increasing interest rates, implementing currency controls, or seeking external assistance.

This article was generated with the support of AI and reviewed by an editor. For further information, please refer to our terms and conditions.