Tuesday, December 25 2018 17:28

ArmInfo.The Central Bank of Armenia has kept the refinancing rate at 6%. As the press service of the Central Bank of Armenia told ArmInfo, this decision was made at a  meeting of the Central Bank's Council on December 25. In fact, the  refinancing rate has been delayed at this level since February 2017.

In November 2018, inflation was recorded at 1% (against 2% in  November 2017), which was mainly due to the relatively slow increase  in prices for seasonal goods. Annual inflation fell by the end of  November to 1.8%. According to estimates of the Central Bank, in the  coming months, the trend of low inflation will continue, which will  generate annual inflation below a minimum threshold for the allowable  range of fluctuations.

The actual growth of the world economy is consonant with forecasts,  in the conditions of which the central banks of the leading countries  continued to tighten monetary conditions. This was accompanied by a  weakening of the inflationary environment in the international  markets for major commodities, based on which the CB Board assumes  that inflationary pressures from the external sector are not expected  in the coming months.

The CB Board notes that in the second half of the year, gross demand  continues to remain relatively weak due to the maintenance of a  restraining fiscal policy and some weakening of private spending. On  the other hand, the low inflationary environment, with the slow  growth of private consumption, has helped to maintain real purchasing  power and secure inflation expectations.

In such a situation, the CB Board considered it expedient to keep the  refinancing rate at the current level, which is considered more  stimulating, taking into account the increase in interest rates in  the partner countries. The Council also believes that, in the context  of the projected macroeconomic development, it will be necessary to  maintain longer stimulating monetary conditions in order to ensure  price stability in the medium term. As a result, it is expected that  inflation will stay at a level below the target threshold with  stabilization near 4% at the end of the forecast period.

If there are risks of deviation of inflation and economic growth from  the projected scenario, the Central Bank will adjust monetary  conditions accordingly to ensure price stability.

To note, the previous meeting of the Central Bank Council at the  refinancing rate was held on November 13, 2018 - 6% were saved, along  with that the rates for Lombard repo remained unchanged - 7.5% and  deposits attracted from banks - 4.5%. The refinancing rate was  revised in 2017 on February 14 - a decline from 6.25% to 6%, in  parallel with that, the Lombard repo rates decreased from 7.75% to  7.5% and deposits attracted from banks - from 4.75% to 4.5%, while  maintaining these levels to this day.