ArmInfo. The Central Bank of Armenia reduced the refinancing rate from 5.75% to 5.5%. As the Central Bank of Armenia press service told ArmInfo, this decision was made on September 10 at a meeting of the Central Bank Council. In accordance with this, were reduced by 0.25 percentage points: the rate on Lombard repo transactions - from 7.25% to 7%, and on deposits attracted from banks - from 4.25% to 4%.
"In the external sector, amid growing uncertainty in the development of the world economy, trends are observed in a significant slowdown in GDP growth, demand and inflation, which is reflected in commodity markets. Based on this, the CBA Council believes that mostly deflationary pressure is expected from the external sector, "the Central Bank said in a statement.
According to the statement of the Central Bank Council, in the III quarter economic activity continues to remain high, which, mainly, in terms of supply is due to growth in services and manufacturing industries, and in terms of demand - due to growth in private consumption. At the same time, fiscal policy continues to have a restraining effect on gross demand.
The Central Bank Council, taking into account the deflationary environment formed in the external sector and the restraining influence of fiscal policy, and also giving preference to a gradual recovery in inflation, considered it expedient to deepen the stimulating effect of monetary conditions by lowering the refinancing rate. In parallel, measures are being discussed aimed to direct financial resources to the development of economic potential.
The Council of the Central Bank of the Republic of Armenia believes that within the framework of the forecasted macroeconomic development, it will be necessary to maintain the stimulating effect of monetary conditions in the medium term to ensure the inflation target. According to the expectations of the Central Bank, inflation in the coming months will remain at a level below the target threshold (4%), stabilizing near this level in the medium term.
It should be noted that the CBA reduced the refinancing rate from 6% to 5.75% at the end of January 2019, keeping it at this level until September 10. On the same day, the rate on Lombard repo was reduced - from 7.5% to 7.25%, and on deposits from banks - from 4.5% to 4.25%.