ArmInfo. The Central Bank kept the refinancing rate at 5.5%. As the Central Bank of Armenia press service told ArmInfo, this decision was made on October 29 at a meeting of the Central Bank Council.
The Central Bank said that the maintenance of global economic slowdown affects international commodity markets. Under these conditions, the central banks of the countries-main partners of Armenia continue to soften monetary conditions. The Central Bank Board believes that inflationary pressures from external sources are not expected.
The Central Bank Council notes that in the III quarter economic activity in Armenia remained at the expected high level due to increased productivity. During the quarter, domestic demand remained high as a result of private consumption growth, which continues to be promoted by the stimulating effect of monetary conditions and the injection of a large volume of dram liquidity. However, the impact of fiscal policy on gross demand has so far been assessed as constraining.
The Central Bank Council, based on the above-mentioned and giving preference to a gradual recovery in inflation, considered it appropriate to maintain the refinancing rate at the same level. The Council of the Central Bank believes that in the context of projected macroeconomic development, it will be necessary to maintain the stimulating effect of monetary conditions in the medium term in order to bring inflation to the target threshold. As a result, inflation is expected to remain low in the coming months, with a gradual return to the target threshold in the medium term.
The Central Bank Council stresses that, due to trends in the global economy and the progress of fiscal policy, the risks of deviation of inflation to the lower limit of the forecast range continue to prevail, in case of which the Central Bank will react accordingly to ensure price stability in the medium term.
It should be noted that the Central Bank of the Republic of Armenia reduced the refinancing rate from 5.75% to 5.5% on September 10, 2019, in accordance with which the rates on Lombard repo were reduced by 0.25 percentage points - from 7.25% to 7%, and deposits from banks - from 4.25% to 4%. Prior to this, a decrease in the refinancing rate took place at the end of January 2019 - from 6% to 5.75%, in connection with which the rates on pawnshop repo decreased the same way - from 7.5% to 7.25%, and on deposits attracted from banks - from 4.5% to 4.25%.