BAKU, Azerbaijan, July 31. The upward revision
of the inflation forecast is mainly driven by external factors,
Chairman of the Central Bank of Azerbaijan (CBA) Taleh Kazimov said
at a press conference on the interest rate corridor parameters,
Trend's correspondent
reports from the event.
Kazimov said several key factors are taken into account when
preparing inflation and economic growth forecasts. Actual trends in
both inflation and economic growth directly affect forecast
indicators.
The CBA chairman noted that the upward revision of the inflation
outlook is primarily linked to external factors, including higher
inflation in Azerbaijan's main trading partner countries.
He added that expectations of slower growth in the nominal
effective exchange rate compared with the same period of the
previous year have also affected inflation forecasts. According to
Kazimov, the nominal effective exchange rate is considered a factor
that reduces inflation, but a slowdown in its growth rate weakens
this effect.
Kazimov said economic growth forecasts are also influenced by a
slowdown in actual economic growth and changes in the economy's
potential growth capacity.
He added that the decomposition of inflation forecasts takes
into account government consumption, household consumption, fixed
capital investment dynamics and other macroeconomic indicators.
