ING Sees Azerbaijan Holding Rates at 6.5% as Region Splits on Monetary Easing

ING Group, the largest financial group in the Netherlands, expects the Central Bank of Azerbaijan to leave its key interest rate unchanged at 6.50% for an extended period, according to an assessment published on 3 September 2026. The call places Azerbaijan and Armenia in a distinct camp from their Central Asian neighbours, which ING classifies as economies still descending from higher inflation.

The reasoning turns on the composition of price pressure rather than its level. Azerbaijani inflation is currently running in a 4-6% band. ING's analysts argue that because the increase is driven mainly by cost-side and supply factors — logistics, food, regulated tariffs — rather than demand, there is no immediate case for the Central Bank to alter its policy stance. Tightening into a supply shock would slow activity without addressing the source of the price increase.

Azerbaijan sits in what ING describes as the low-inflation-base group. Kazakhstan and Uzbekistan, by contrast, are treated as economies working down from elevated levels. Kazakhstan has pulled annual inflation into single digits at 9.8%, while Uzbekistan may cut rates during 2026. Even there, ING cautions that the global inflation environment does not permit large-scale monetary easing. The assessment was reported by APA-Economics.

The forecast is consistent with the fiscal picture. Fitch Ratings projects average annual inflation in Azerbaijan rising to 6.1% in 2026, citing higher logistics costs, food prices and regulated tariffs — the same cost-push drivers ING identifies. Fitch also expects real GDP growth of about 2%, with prudent fiscal policy offsetting the effect of energy prices and a moderate pickup in lending. That combination argues for a central bank content to sit still.

A stable 6.50% rate carries practical consequences for regional business. Corporate borrowers in Azerbaijan face predictable funding costs into 2027, which supports the credit growth Fitch already assumes. It also reduces manat volatility risk for cross-border trade financing along the Middle Corridor, where Azerbaijani banks intermediate a growing share of transit-related working capital. Fitch's growth outlook was published in June.

The divergence ING flags is worth tracking. If Kazakhstan and Uzbekistan begin easing while Azerbaijan and Armenia hold, regional rate differentials will widen, changing the relative attractiveness of local-currency deposits and short-dated government paper across the wider Caspian region. For treasurers running multi-country balance sheets, that repricing is the practical takeaway.

The risk to the view is external. A sustained move in energy or freight costs — Brent traded near $96 in early September amid renewed US-Iran tensions — could push Azerbaijani inflation above the 6% ceiling and force the Central Bank to revisit its stance sooner than ING assumes.

Further Reading

• S&P Calls Armenia's Banks Well Capitalized as Securities Portfolios Shrink 9.5%
• Baku Home Prices Rise 12.4% as Wages Lag at 7%, Stretching Affordability