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Central Bank of Armenia keeps refinancing rate unchanged

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The Board of the Central Bank of Armenia (CBA) has made a decision to keep unchanged the refinancing rate, at 5.75%, during today’s session, the CBA told Armenpress.

In May 2019, 0.4% deflation has been registered compared to the 1.0% of May 2018. In such circumstances the 12-month inflation increased, comprising 2.8% conditioned with the seasonal increase of prices of several agricultural goods.

Major uncertainties emerged regarding the global economic development due to the escalation of trade wars in the external sector which affected both the financial and raw material goods market trends. In addition, the US economic development prospects have certainly deteriorated, therefore it is expected that the Federal reserve system will run a milder monetary-credit policy in the future. Although there are some short-term inflationary manifestations in the markets of main food products, the CBA Board states that no major inflationary pressures are expected from the external sector in general.

The Board recorded that the high economic activity growth rates are maintained, and the economic growth registered in the first quarter of 2018 surpasses the expected figure which has been mainly contributed by the high growth of private consumption.

The CBA Board believes that the current low inflation contributes to anchoring the long-term inflationary expectations and maintaining the purchasing power. In such circumstances the CBA Board gives its preference to the gradual recovery of inflation under which it finds appropriate to keep the current expansionary rate of monetary-loan terms, keeping unchanged the refinancing rate. At the same time, in case of predicted macroeconomic developments, it will be necessary to keep the expansionary position in the long run for the implementation of the inflation goal in the medium run. As a result, the expectation is that inflation will still be running below the lower part of the confidence band and stabilizing around the targeted figure in the medium run.


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