ArmInfo. The Council of the Central Bank of Armenia recorded a continuation of the trend of accelerating the growth of domestic demand, which was manifested by a significant excess of the projected indicators of private consumption and private investment. The Central Bank stated that the growth of domestic demand was facilitated by an expanded monetary policy and a relatively high growth in bank lending to the economy (in February, 17.6% per annum). As the press service of the Central Bank told ArmInfo on April 9, the Council of the Central Bank made such conclusion at the last March meeting.
At the same meeting, the consonance of the development of the external sector was also presented to the forecasts of the Central Bank of Armenia, namely, the stabilization of the growth of the world economy continued. In particular, in the Eurozone, growth slightly exceeded the projected rate, reaching 2.7%, while in the US and Russia, the growth of the economies to some extent gave way to the forecasts, amounting to 2.5% and 1.5%, respectively. In the international markets of basic commodities, inflationary tendencies were kept, consistent with the forecasts of the Central Bank of Armenia, and a restrained rise in price of dairy products and grains was observed in the international food markets in conditions of price reduction. Based on macroeconomic development and inflation trends, the Fed and the Central Bank of Europe continued to raise the key rate, while the CBR retained a policy of easing monetary conditions. According to the Central Bank of Armenia, in the coming months, inflationary tendencies will remain on the international food markets and under these conditions a weak inflationary influence from the external sector is expected.
At the same meeting, the consonance of the development of the external sector was also presented to the forecasts of the Central Bank of Armenia, namely, the stabilization of the growth of the world economy continued. In particular, in the Eurozone, growth slightly exceeded the projected rate, reaching 2.7%, while in the US and Russia, the growth of the economies to some extent gave way to the forecasts, amounting to 2.5% and 1.5%, respectively. In the international markets of basic commodities, inflationary tendencies were kept, consistent with the forecasts of the Central Bank of Armenia, and a restrained rise in price of dairy products and grains was observed in the international food markets in conditions of price reduction. Based on macroeconomic development and inflation trends, the Fed and the Central Bank of Europe continued to raise the key rate, while the CBR retained a policy of easing monetary conditions. According to the Central Bank of Armenia, in the coming months, inflationary tendencies will remain on the international food markets and under these conditions a weak inflationary influence from the external sector is expected.
The development of the financial sector was characterized by the Central Bank as follows: in February- March, short-term interest rates basically stabilized near the refinancing rate. This was partially facilitated by the use by the regulator of instruments of absorbing excess liquidity.
The CB Board believes that, within the framework of the forecasted development, it will be necessary in the future to phase out the stimulating impact of monetary conditions in stages. But, proceeding from the expected insignificant inflationary influence from the external sector and the economy of Armenia and taking into account the considerable mitigation of the additional inflationary expectations accumulated at the end of last year, the CB Board still prefers to maintain the refinancing rate at the same level of 6%. As for the possible tightening of monetary conditions, the Central Bank's Board will correct them in the monetary policy program of the next quarter. The Central Bank retained the refinancing rate at the previous level of 6% at a meeting of the Council on March 27. Along with this, at the same level, the rate for lombard repo was set at 7.5%, and deposits attracted from banks - 4.5%. In 2017, after the February fall from 6.25% to 6%, at the subsequent meetings (in March, May, June, August, September, November and December), the Central Bank left the refinancing rate unchanged, also in February-March 2018. Inflation in February 2018 was 0.5%, and in comparison with February 2017 - 3.3%. Economic activity in Armenia in January-February 2018 compared with the same period in 2017 increased by 8.6%. The GDP growth in Armenia in 2017 was 7.5%.