The conduct of monetary policy will remain difficult, given the limited tools available to the Central Bank of the Azerbaijan Republic, and the lack of co-ordination between fiscal and monetary policy. The Central Bank's monetary policy committee raised the refinancing rate by 0.25 percentage points, to 5.25%, effective from May 2011. The increase is only the third time that the Central Bank has raised the rate since May 2009. The Central Bank remains concerned over inflationary pressures, and this has been the main factor behind its decision to increase the rate on two occasions in 2011. If conditions do not improve, further increases in the refinancing rate cannot be excluded. Nonetheless, the increase in the refinancing rate will have only a limited impact, as the domestic debt market is underdeveloped. At the monetary policy meeting in May, the Central Bank also increased the reserve requirements on banks' external and domestic liabilities from 2% to 3%. The Central Bank has reiterated its commitment to maintaining the stability of the banking system and to ensuring sufficient liquidity in the financial system, which will provide some support to economic growth over the medium term.