Azerbaijan: CBRA stays on hold at 6.5%, sounds hawkish

Research evidence excerpt

Azerbaijan: CBRA stays on hold at 6.5%, sounds hawkish

J P M O R G A N Europe Economic Research

31 July 2026

Azerbaijan: CBRA stays on hold at

6.5%, sounds hawkish

• The Central Bank of the Republic of Azerbaijan (CBRA) kept its EM, Economic and Policy Research

refinancing rate on hold at 6.5%, in line with our expectations Fatih Akcelik

• The CBRA revised up its inflation forecast to 6.1% oya (previously 5.9%) (44fatih.akcelik@jpmorgan.com20) 3493 7285

for end-26, and to 5.8% oya (previously 4.5%) for end-27 J.P. Morgan Securities plc

• The CBRA`s communication suggests that the policy rate is likely to

remain on hold at 6.5% for an extended period

• The CBRA has raised its forecast for the current account surplus to $6.1bn

for 2026 (previously $5.5bn) and to $5.2bn for 2027 (previously $4.4bn)

• Rising current account surplus and ongoing de-dollarization reinforce the

sustainability of FX peg

The CBRA kept its refinancing rate on hold at 6.5%, in line with our

expectations. The CBRA highlighted that headline CPI inflation stood at 5.6%

oya, with core inflation at 5.5% oya in June. The CBRA revised up its inflation

forecast from 5.9% to 6.1% for end-26, and from 4.5% to 5.8% for end-2027. These

upward revisions were attributed to the intensified impact of direct and indirect

external cost factors, which are expected to be transitory over the medium term.

We expect the CBRA to keep its policy rate unchanged at 6.5% throughout 2026

and the first half of 2027, as it sees the risks to the inflation outlook to be tilted to

the upside. These upside risks include higher energy and food prices against the

backdrop of heightened global geopolitical tensions, as well as the potential for

imported inflation from trading partners.

Figure 1: CPI inflation and CBRA refinancing rate