Azerbaijani Economy 13 september — 11:27

Elman Rustamov about inflation targeting

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The transition to the inflation targeting regime in Azerbaijan will take at least two years, Chairman of the Central Bank of Azerbaijan (CBA) Elman Rustamov told Trend Agency.

According to Rustamov, this is a very complicated process that requires interdepartmental interaction, especially in the financial sector.

'The decisive part of the process is the activation of the inter-bank manat market, because inflation targeting passes through interest rate targeting. This is the world practice. In this matter, the development of the securities market is very important,' said the CBA head.

As the interlocutor of the agency noted, in turn, for the development of the securities market at the initial stage it is important to establish trust between banks and to increase liquidity trade, and for this an advanced market of collateral is needed.

'In connection with this, we have recently dramatically expanded the issuance of notes, which gives impetus to the development of the interbank market. In general, it is necessary to develop the government securities market. Today, this market is very small,' he added.

According to the State Statistics Committee, inflation in Azerbaijan in January-July 2018 was 2.8 per cent. The Central Bank planned to keep the level of inflation at the level of six to eight per cent. As CBA Chairman Elman Rustamov said earlier, until the end of the year, inflation will remain below the target.

It should be noted that many international experts agree that under the global crisis, the inflation targeting regime has a great advantage over other monetary policy regimes due to its greater stability. Targeting inflation can reduce the volatility of the economy.

Various studies show that in countries where the inflation targeting regime operates, there is a lower level of macroeconomic imbalance.

Many countries that have used this regime before the 2008 crisis did not change it to another mode of monetary policy.

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