The Central Bank of Azerbaijan's latest inflation forecast may appear modest at first glance, but it offers an important clue about the direction of monetary policy over the coming year. While the institution has slightly raised its inflation expectations, the revised outlook still points to price growth remaining within its target range. If that assessment proves correct, there is little reason to expect any major change in interest rates in the near future.

According to the Central Bank, annual inflation is now expected to average 6,1% in 2026, compared with an earlier forecast of 5,9%. The projection for 2027 has also been revised upward from 4.5% to 5.8%. The changes reflect a somewhat less favorable external environment, including higher global food prices, stronger inflation among Azerbaijan's trading partners and a weaker disinflationary effect from the nominal effective exchange rate. These factors suggest that imported inflation will remain an important source of price pressure over the coming quarters.

Despite the revisions, one fact stands out. The projected inflation rates remain within the........

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