For a few days, there have been reports that banks will increase loan interest rates again. According to information, it is planned to increase deposit interest rates for savings by banks. It is reported that this step will lead to higher loan prices and banks will offer higher interest loans.
But can loan interest rates increase?
According to economist-expert Fuad Ibrahimov, who expressed his views on the issue to Bizim.media, several factors can affect the increase in loan interest rates.
First of all, the inflation policy implemented by the government may play a role in this matter, according to the expert, who points out that the world experience in the fight against inflation is based on:
“This can lead to an increase in the discount rate and loan interest. As in some countries, such an event happened. We know that the government of Azerbaijan has defined some inflation targets, and banks should take this as a basis for themselves.”
According to the expert, banks put forward various proposals to increase the deposits taken from the population:
“As the deposit interest increases, citizens turn to the bank. Today, the situation in the country is such that citizens either keep the collected funds “under the pillow” or in the bank, depending on the level of inflation. The bank tries to increase the size of the deposit portfolio in various ways, which can be done by increasing interest rates. This, in turn, causes loans to fall.”
Our interviewee evaluated the policy implemented by the Central Bank as the most optimal management method in the last 10 years:
“This is actually calculated to settle more issues. Today, in addition to the banking sector, there are other financial institutions that can provide loans in our country. In fact, banks have to compete with them to raise interest rates. Moreover, those organizations have relatively few liabilities and can provide loans at low interest rates.
From this point of view, there is no basis for the information spread on social networks about the increase of loan interest rates. I don’t think that any bank should charge 2%, 3% or 4% extra money for a loan from a citizen. Because they can see a serious reduction in their loan portfolios.
#interest #rates #rise
