Armenian CB to continue reducing refinancing rate - EDB

ArmInfo. The Eurasian Development Bank predicts that in December of this year, the Central  Bank of Armenia will make another reduction in the refinancing rate. This is stated in the weekly macro review of the Bank, presented on November 4 on the EDB page in Telegram - channel.

As noted in the macro review, at the meeting on October 29, the  Central Bank of Armenia reduced the refinancing rate by 0.25  percentage points - to 7.25%. "The decision was made in the context  of a weak inflationary background, which is due to a decrease in  international prices for goods and raw materials, a slowdown in wage  growth and inflation expectations. 

Consumer prices grew by 0.6% y/y in September after 1.3% y/y in  August. Given that inflation is persistently below the target range  of the Central Bank of Armenia (4 + 1.5%), we expect another  reduction in the refinancing rate in December," the Bank said in a  statement. 

Earlier, ArmInfo reported that on October 29, the Central Bank of  Armenia decided to reduce the refinancing rate, this time by 0.25  percentage points - from 7.5% to 7.25%. This is already the seventh  reduction in the key rate this year, by a total of 2 percentage  points (from 9.25% in December 2023).

In accordance with this, the rates on Lombard repos have been reduced  by the same amount - from 9% to 8.75%, and on deposits attracted from  banks - from 6% to 5.75%.

Thus, over more than a year and a half, the Regulator has reduced the  key rate by 3.5 percentage points, in accordance with which the rates  on Lombard repos and on deposits attracted from banks have decreased  by the same amount - from the maximum of 10.75%, 12.25% and 9.25%,  respectively, recorded at the beginning of 2023.

But for now, the current levels of the refinancing rate, rates on  Lombard repos and on deposits attracted from banks are far from the  minimum levels of 4.25%, 5.75% and 2.75%, respectively, recorded in  the second half of 2020.

According to statistics, in September 2024. compared to September  2023, inflation was recorded at 0.6%, against an inflationary 0.1% in  September 2023. compared to September 2022. The basic annual  inflation rate calculated by the Central Bank in September 2024 was  0.7%, against a deflationary 0.1% a year earlier.