Macroeconomic Forecast Azerbaijan

Headline consumer price inflation slowed in April, measuring 8.9% year-on-year (y-o-y), as the index fell 0.3% on the previous month. This marks a slowdown from the 9.2% y-o-y headline inflation rate recorded in March and chimes with our end-year inflation target of 7.9%. We expect inflation to continue stalling in the second half of the year as cost-push inflation drops off amid lower global commodity prices. Moreover, the central bank has been aggressively raising interest rates since November last year, so far lifting the refinancing rate by a cumulative 325 basis points to 5.25% in May. We currently forecast the refinancing rate to climb to 8.00% by year-end.

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