Azerbaijan.US
Interest rates on bank loans in Azerbaijan are continuing to rise, reflecting the delayed impact of the country’s tight monetary policy aimed at containing inflation and stabilizing prices.
According to market data, loans that were offered at annual rates of around 11–17 percent last year are now typically starting from 18 percent or higher, depending on the borrower’s profile and lending conditions.
Economist Khalid Karimli attributes the trend to the restrictive stance of the Central Bank of Azerbaijan. He explains that banks have been forced to raise deposit rates in order to attract household savings, increasing their overall cost of funding.
“When banks have to pay more for deposits, they inevitably pass those costs on to borrowers,” Karimli said. “As a result, higher deposit rates translate directly into higher lending rates.”
Over the past several years, both average deposit and loan rates have moved upward, reflecting the regulator’s efforts to absorb excess liquidity and curb inflationary pressures. The central bank’s priority, analysts note, remains price stability rather than short-term credit expansion.
Despite easing inflation compared with earlier peaks, the regulator does not yet view inflation risks as fully neutralized. As a result, a shift toward lower interest rates is not expected in the near term.
Economists also point out that the current rise in borrowing costs illustrates the time lag with which monetary policy affects the real economy. Tightening measures introduced roughly three years ago are now being felt most clearly by households and businesses seeking credit.
For borrowers, this means higher monthly payments and more cautious lending standards, while banks continue to balance inflation risks against the need to support economic activity.
