An armbanks.am visitor’s question for former chairman of Armenian Central Bank Bagrat Asatryan
Q. How would you comment on Central Bank’s decision to leave its key refinancing rate unchanged at 8 percent?
‘There is no need for the regulator to revise its key refinancing rate which was left unchanged by its board earlier this week at 8 percent. The market did not see developments of late, which would make the Central Bank to change the rate. The refinancing rate inArmeniadoes not play the same role as it does in developed countries because when CB revises its upwards or downwards it does not send development impulses to economy.”
The last time the Central Bank revised its rate downward was on September 6, 2011, when it cut it t from 8.5 percent to 8 percent.
The refinancing rate is an interest rate set by the Central Bank to use to lend money to commercial banks. It defines all other rates in economy and reflects on population’s attitude towards savings and investments. Refinancing rate is changed depending on inflation rates and acts as a strong regulator of economic activity. High refinancing rate makes getting loans by businesses complicated constraining investments in production of goods and services. When the economy must be given a boost the refinancing rates is brought down to make loans attractive and available.
