FX.co ★ Azerbaijan Cuts Key Rate Again

The Central Bank of the Republic of Azerbaijan reduced its discount rate by 0.25 percentage points to 6.5% during its February 2026 meeting, marking the lowest rate since September 2021. This decision is part of an ongoing, gradual easing cycle as inflation remains within the target range of 4±2%. The central bank also adjusted the interest rate corridor, setting the lower limit at 5.5% and the upper limit at 7.5%, indicating the policymakers' intent to ensure sufficient liquidity. This move demonstrates the central bank's assessment that inflationary pressures are diminishing, as evidenced by a recent decline in inflation rates and core inflation nearing the target, along with stable foreign exchange conditions and increasing foreign exchange reserves. Officials noted that inflation risks have remained relatively unchanged, with external price transmission and domestic cost factors continuing to be key concerns. Moving forward, the bank reiterated its commitment to a data-driven approach, emphasizing its readiness to alter policy if actual or projected inflation diverges from its baseline forecast.