Central Bank keeps refinancing rate unchanged
The Board of the Central Bank of Armenia made a decision to keep the refinancing rate unchanged, setting it 6.0% during the August 14 session, the CBA told Armenpress.
1.2% deflation was recorded in July 2018 compared to the 2.6% deflation of July 2017, in case of which the 12-month inflation has increased to some extent, comprising 2.3% by the end of the month. At the same time, the normal inflation has decreased a little in July but still being maintained at a relatively high level. The CB Board estimates that the 12-month inflation will approach the targeted figure in coming months.
The global economic growth trends continued in the external sector and inflationary developments in main international commodity markets were recorded. According to the CB Board, the increase of fluctuation of financial markets have been registered on the background of the US sanctions in several regional countries, which at the moment doesn’t contain great risks for the Armenian financial markets, but in case of any risk, the Central Bank will react adequately.
The Board states that the economic activity has been restored thanks to the acceleration of the growth of the reprocessing industry and agriculture in June 2018. According to the CB Board, the gross demand will gradually weaken in the future, in connection with the restraining process of fiscal policy which is expressed by major savings of expenditures compared to the expected.
Taking into account the expected developments, the CB Board considers appropriate to keep the promoting monetary-loan terms, by keeping the current refinancing rate unchanged. At the same time, the Board states that under the predicted developments there will be a need for neutralization of monetary-loan terms aimed at implementing the inflation goal. As a result, it is expected that the 12-month inflation will fluctuate in a permissible range, stabilizing over a targeted 4% figure.
In case of deviation risks from economic development prospects and inflation recovery trajectory, the CBA will clarify the monetary-loan policy directions by ensuring the price stability.