The Central Bank of the Azerbaijan Republic raised the refinancing rate by 0.25 percentage points on May 6th, to 5.25%. The increase marks the second time that the Central Bank has increased the rate since the start of 2011. The Central Bank also increased reserve requirements (both domestic and foreign) for banks operating in Azerbaijan to 3% (up from 2%). The authorities have been concerned by the surge in inflationary pressures since late 2010. Prices have been driven up by the increase in world food prices and global oil prices, which has boosted the flow of foreign currency into Azerbaijan. The rise in consumer price inflation appears to have peaked in February 2011, when inflation was 9.3% year on year. Since February, inflationary pressures have started to ease. According to data from the State Statistics Committee (SSC), the increase in year-on-year inflation slowed to 9.1% in March and 8.8% in April. Nonetheless, if inflationary pressures were to pick up again, it is likely that the Central Bank will decide to tighten monetary policy further.