ArmInfo.In Armenia, in conditions of high economic uncertainty in the short term, there are risks of inflation deviation towards growth. The head of the RA Central Bank Martin Galstyan said this at a press conference on December 15, noting that the Central Bank constantly monitors the development of events and, if necessary, is ready to react to ensure price stability. According to his forecasts, in the mid-term, inflation in Armenia will not exceed 4%.
In November 2020, an inflation rate of 1.3% was recorded in Armenia, against 1.1% in the same month of last year, in terms of which the y-o-y inflation was 1.6%, being below the target threshold (4%, +/- 1, 5). Galstyan noted that real inflation in November 2020, compared to November 2019, continued to grow, reaching almost 2% by the end of the month.
At the same time, he stressed that in the consumer market for certain goods, there is an increase in prices associated with a number of factors - the rise in prices for food products (due to the rise in their prices on international markets) and the devaluation of the dram. Taking into account the expected inflationary impact from the external sector in the context of a certain acceleration of projected inflation, inflationary expectations and an increase in the risk premium when lending to the country, the Central Bank considered it expedient on December 15 to raise the refinancing rate by 1 percentage point. (from 4.25% to 5.25% - ed. note), "M. Galstyan said.
He recalled that in the third quarter, in line with the forecasts of the Central Bank, there was an economic decline of 9.1% per annum, which was due to the decline in all industries, especially noticeable in the service sector. In the Q4, according to the Central Bank, low economic activity and weak domestic demand will continue due to the martial law in Armenia and a new wave of coronavirus with a high spread rate.
On the other hand, the implementation of the planned expansionary fiscal policy will have a positive impact on gross demand. "In these conditions, the Central Bank chose not to revise the forecast for Armenia's GDP for 2020 (leaving in force the 6.2% decline - ed.note). At the same time, he noted that, nevertheless, the effect of monetary policy continues to be stimulating, but in the forecast horizon, it will be advisable to reduce this effect in order to stabilize inflation near the target level (4 + -05%).
