Tuesday, September 23 2014 18:12
Central Bank of Armenia retains refinancing rate at 6.75%
ArmInfo. The Central Bank of Armenia (CBA) has retained the refinancing rate at 6.75%. The press service of the CBA has told ArmInfo that the specified rate was fixed on Aug 12 following a reduction from 7%.
The source says that in August 2014 inflation made up 0.7% versus 0.3% in August 2013, and the annual inflation rose to 0.8% by late August. The CBA Council thinks that within the next few months the inflationary environment will expand even more and will stabilize within the target range in H1 2015.
The external demand is recovering slowly while some deflationary pressure is observed due to the supply growth in the commodity markets. Nevertheless, the CBA Council states that there are still some uncertainties in economic prospects in the partner countries and in the commodity markets.
In Q3 2014 the economic activity slightly grew, but the economic growth rates are still low. Despite the low demand in the foreign and domestic economies, the CBA Council considers that the continuous softening of the monetary conditions is enough to increase the gross demand and recover the inflation rates within the short-term outlook amid the expected expansion of the fiscal policy in H2 2014 and marking of goods scheduled for Q4 2014. As a result, in Q4 2014 and Q1 2015 the annual inflation will gradually rise and approach the target.
Along with development of foreign and domestic economies within the mid-term outlook, the CBA is adjusting the monetary policy directions to ensure the inflation within the target range.
To recall, on August 12, Armenia's Central Bank lowered the refinancing rate for the fourth time in 2014 - from 7% to 6.75%. Lombard repo and deposit rates were reduced from 8.5% to 8.25% and from 5.5% to 5.25%, respectively. On Feb 11 the CB lowered its refinancing rate from 7.75% to 7.5% (with Lombard repo and deposit rates reduced from 9.25% to 9% and from 6.25% to 6%, respectively). On May 13 the refinancing rate was lowered from 7.5% to 7.25%, the Lombard repo and deposit rates reduced from 9% to 8.75% and from 6% to 5.75%, respectively. On June 24 the CB lowered the refinancing rate from 7.25% to 7% (with Lombard repo and deposit rates reduced from 8.75% to 8.5% and from 5.75% to 5.5%, respectively).
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