No direct link between oil price and key interest rate -Kazimov

Changes in global oil prices have no direct impact on Azerbaijan’s key policy rate, Central Bank Chairman Taleh Kazimov said.

He noted that while oil price fluctuations mainly affect the balance of payments, their impact on the policy rate and import prices remains limited.

“Our models show that in major developed economies, changes in interest rates have only a minor effect on import prices. Therefore, there is no direct correlation between oil prices and the policy rate,” Kazimov said.

According to forecasts, the average oil price in 2025 is expected to be around $64–65 per barrel. The Central Bank projects that the nominal effective exchange rate will decline by about 2% by the end of this year and strengthen by 7% in 2026.

The real effective exchange rate index currently stands at 111 points, indicating that the manat remains stable despite inflation differentials among trading partners. Kazimov added that the nominal effective exchange rate is expected to have a reducing effect of 2.16 percentage points in 2026.

He also described the recent decline in the U.S. dollar index — now at 98.9 — as a “return effect” relative to global currencies.