Armenia`s CB leaves refinancing rate unchanged 6.75%

ArmInfo. The Central Bank of Armenia once again considered it appropriate to keep the refinancing rate at 6.75%. This decision was made on May 6 at a meeting of the Board of  the Central Bank of Armenia.

The rates on Lombard repos - 8.25% and on deposits attracted from banks - 5.25% were also kept at the previous level.

In total, from mid-2023 to this day, the key rate has been reduced by 4 percentage points (from the historical maximum of 10.75% in December 2022). In accordance with this, in less than 2 years, the rates on Lombard repos and on deposits attracted from banks have decreased by the same amount (by 4 percentage points) - from the maximum of 12.25% and 9.25%, respectively, recorded in December 2022  (and maintained until June 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 March 2025, compared to March 2024, inflation was recorded at 3.3%, against a deflationary 1.2% in March 2024 compared to March 2023. The Central Bank's calculated baseline annual inflation rate for February is slightly lower - 2%, compared to the annual deflationary rate of 0.7% in March 2024.

A detailed justification for the decision of the Central Bank Council to leave the refinancing rate unchanged this time will be presented at a press conference today at 14:00 by the Chairman of the Central Bank, Martyn Galstyan.

The Central Bank of Armenia, after 2.5 years (from December 2020 to mid-2023) of increasing the refinancing rate from a minimum of 4.25% to a maximum of 10.75% (i.e. by 6.5 percentage points), began to reduce the key rate starting from June 13, 2023, continuing this policy in 2024 and early 2025.

Starting from 2025, the target inflation rate is set at 3% with a  range of permissible deviations of +/- 1 percentage point (versus the previous 4%, +/- 1.5 percentage points). The RA Law "On the State Budget of Armenia for 2025" stipulates that the Central Bank will henceforth be guided by this inflation target when making decisions on monetary policy. Reducing the inflation target threshold is an important prerequisite for the implementation of the joint approach of the Central Bank and the Government towards the prospects of long-term stable economic growth and improving the welfare of  society.