Monetary Policy Decisions Transmission Via Interest Rate Channel Gradually Improving - CBA

(MENAFN- Trend News Agency) BAKU, Azerbaijan, December 28. The assessment indicates a progressive enhancement in the conveyance of monetary policy determinations through the interest rate mechanism, Trend reports via the Central Bank of Azerbaijan's (CBA) statement on the main directions of monetary policy for 2025.

The statement indicates a correlation between interbank interest rates and the interest rates applicable to specific deposit categories, suggesting synchronous movement in their trajectories.

"At the same time, interbank money market interest rates also affect the yield on securities with different maturities. In the first 11 months of 2024, the money base in manat decreased by 1.4 percent, while the broad money supply in manat (M2) decreased by 2.1 percent. As in previous years, changes in government account balances this year were one of the key factors influencing the money supply.

Throughout the initial 11 months of the current fiscal year, the dynamics of interest rates in the unsecured money market exhibited a responsive correlation to fluctuations within the interest rate corridor during this timeframe, resulting in average interest rates aligning with the parameters established by the CBA's interest rate corridor.

In November 2024, the average interest rate for transactions in the interbank unsecured money market with a maturity of one-three days (1D AZIR) was 7.66 percent. During the reporting period, measures were also taken to strengthen communication regarding interest rates in the interbank money market," the statement emphasized.

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