Armenia`s Central Bank preferred not to change refinancing rate of 6%

ArmInfo. The Central Bank of  Armenia preferred not to change the refinancing rate yet, keeping it  at 6%. As the press service of the Central Bank of Armenia told  ArmInfo, this decision was made on February 13 at a meeting of the  Council of the Central Bank along with this, at the same level, the  rate for lombard repo was kept at 7.5%, and deposits attracted from  banks - 4.5%.

According to the source, in the external market, development  basically reflects the continuing trends in the accelerating growth  of the world economy and the continuing inflation environment in some  international commodity markets. In this context, the CB Board is  still expecting that, in parallel with the increase in external  demand, a weak inflationary influence will remain.  According to the  Central Bank estimates, in the fourth quarter of 2017 there was a  fairly high economic activity, mainly due to high growth rates in the  services sector and the industrial sector. This was accompanied by an  acceleration in the growth of domestic private demand, which  continues to be supported by an expanded monetary policy and a  relatively high growth in lending to the economy from the financial  system. But in order to ensure a stable recovery of demand, monetary  stimulus is still needed, especially since the additional  inflationary expectations have significantly weakened.

Considering the above mentioned, the CB Board considered it expedient  to maintain the current level of monetary and credit conditions. At  the same time, the CB Board believes that in the context of the  forecasted development in the medium term, the stimulating monetary  conditions will need to be gradually neutralized to ensure inflation  at the target level. As a result, a gradual increase in inflation is  expected with a fluctuation in the permissible range and  stabilization in the future at the target threshold. In January 2018,  inflation was formed at the level of 2.7%, and the same level of  annual inflation (January 2018 to January 2017), and the direct and  indirect impact from tax and customs changes was within the CB  estimates.

The Central Bank, depending on the prospects for economic development  and the risks of deviating inflation from the recovery path, will  adjust the monetary and credit conditions accordingly.

In 2017, after the February fall from 6.25% to 6%, at the subsequent  meetings (in March, May, June, August, September and  November-December), the Central Bank left the refinancing rate  unchanged. At the same time, lowered in February rates on pawn-shop  repo rates - from 7.75% to 7.5% and deposits attracted from banks -  from 4.75% to 4.5%, were subsequently not revised. Prior to this, at  the end of 2016, on December 27, the refinancing rate was reduced  from 6.5% to 6.25%, along with a decrease in interest rates on  lombard repo - from 8% to 7.75% and deposits attracted from banks -  from 5% to 4.75%. At the end of 2015, on December 22, the refinancing  rate was reduced from 9.75% to 8.75%, at the same time, the rates for  pawn-office repo decreased from 11.75% to 11.25%, and on attracted  deposits from 8.75% % to 8.25%.