Azerbaijan’s central bank cuts 2026 inflation forecast to 5.9% from 6.1%

Azerbaijan’s central bank expects annual inflation to reach 5.9% by the end of 2026, down from its July forecast of 6.1%.

The Central Bank of Azerbaijan (CBA) projects medium-term annual inflation to remain well anchored within its target band, forecasting a rate of 5.9% at the close of both 2026 and 2027 under its revised October baseline scenario. Compared to the July assessment, the inflation path was adjusted downward by 0.2 percentage points for 2026 and upward by 0.1 percentage points for 2027, premised on the assumption of steady state-administered prices and tariffs.

The regulator emphasized that primary upside risks stem from the external economic environment. Elevated global energy and food commodity prices driven by geopolitical volatility remain capable of transmitting imported inflation via major trading partners, with the pass-through magnitude conditioned by movements in the manat's nominal effective exchange rate (NEER). Under prevailing fiscal and monetary settings, domestic demand is not expected to exert considerable inflationary pressure, and upcoming decisions regarding the interest rate corridor will hinge on multi-scenario evaluations of these macro parameters.

N. Tebrizli