YEREVAN, November 15. /ARKA/. Armenia’s Central Bank Board at a meeting on Tuesday decided to reduce the refinancing rate by 0.25 percentage points to 6.5%, the press service of the regulator said.
The CB said 0.5% inflation was registered in 2016 October against 0.4% deflation reported for 2015 October, resulting in the 12-month deflation of 0.9%. According to Central Bank estimates, deflationary environment will continues to soften until the end of the year.
The Central Bank said it does not expect serious inflationary impact of the external sector in the coming months despite slow pace of world economic growth and weak inflationary developments at international commodity markets.
The Central Bank recorded the continued slowdown of economic activity mainly due to supply factors, in particular, the slowdown in industry and agriculture sectors.
In the first quarter of 2017 a decrease in tariffs for gas and electricity is expected to come into force, which is a supply factor that will lead to some short-term only inflation reduction. However, the CB Board believes that deflation risks will persist in the medium term, added now by the factor of 2017 fiscal policy. Under these conditions, a certain easing of monetary conditions is appropriate, it said.
Thus, as a result of consistent stimulating monetary policy the deflationary environment in the coming months will be neutralized and be returned to the projected 12-month target.
At the same time, in cases of additional risks the CB will react appropriately to ensure the inflation indicator for the medium term.
It is the seventh consecutive cut of the benchmark rate by the regulator within this year. In February, the rate was reduced from 8.75% to 8.5%, in March – to 8.25%, in May – to 7.75%, in June –to 7.5%, in August – to 7 25%, and in September – to 6.75%. -0-
