Central Bank of Armenia reduces refinancing rate from 9.75% to 8.75%

 

The inflation in November 2015 totaled 0.6% versus 1.3% in November 2014. In these conditions year-over-year inflation reached 1.2% by the end of November. The drop was determined by low prices of 

agricultural products and a decline in prices of some imported goods. 

 

Trends of slow growth of the global economy and the continuing decline in prices at world commodity markets remain in the external sector. CBA Board thinks that these developments contributed to 

decline in inflation in Armenia and the tendency of deflationary influence on domestic prices will continue in the upcoming months.  

 

The Central Bank states that economic activity in Jan-Nov 2015 increased by 2.9% in Armenia versus the same period of 2014 mainly due to growth in agricultural sector and mining industry. Despite the 

stimulating effect of fiscal policy in 2015, domestic demand remains in law level. In such conditions formed law inflation reduced inflation expectations, which will keep law inflation environment in 

the future under influence of weak domestic demand and external deflation trends. 

 

According to CBA Board, inflation risks that emerged at the end of last year have largely been overcome and, thanks to a sharp easing of monetary conditions in recent months there is a return now to the 

normal situation that existed before November 2014.  According to the Central Bank Board, in the coming months the inflation will remain at a low level, and then, as a result of Central Bank's corresponding policy will slowly expand stabilizing around the target band in the forecasting horizon.  

 

In the future monetary conditions will be adjusted in line with the situation. 

 

To note, the previous review of refinancing rate took place on November 10, 2015 when Central Bank of Armenia (CBA) reduced refinancing rate from 10.25% to 9.75%. Rate on Lombard REPOs was reduced from 11.75% to 11.25%, while the deposit rate was reduced from 8.75% to 8.25%.