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.
