YEREVAN, June 27. /ARKA/. The board of the Central Bank of Armenia decided Tuesday to leave the key refinancing rate unchanged – at 6%, the regulator’s press office reports.
In May 2018, inflation was recorded at 1% against the 0.2% recorded at the same month a year before.
As a result, the 12-month inflation, continuing its downward motion, shed to 1.6% in late May.
The low inflation was mainly resulted from decrease in prices for season goods.
The central bank says natural inflation, too, was lower-than-expected.
In the outside sector, world economy improvement trends remain, and inflation on basic commodities at international markets was far higher than expected.
Current and expected tightening of monetary requirements is due to acceleration of inflation in key countries and partner countries, and this has driven risks for developing countries up at international financial markets and has also increased interest rates on securities.
In this context, the central bank expects certain increase of inflation risks from the outside sector.
The board placed it on record that economic activity was higher than projected because of a fast growth in productivity in construction and services sectors.
Demand was marked by fast growth in investments, a slowed down growth in money transfers from abroad and a relatively slow growth in private consumption.
The board thinks that in such circumstances the influence of gross demand on inflation was weaker than projected.
Taking into account the mentioned above as well as restraining effect of the tax and budgetary policy on the economy, the regulator’s board finds it reasonable to preserve the expanding monetary conditions leaving the key refinancing rate unchanged in the context of the growing international interest rates.
The board also says that despite the current low inflation environment, the necessity of a gradual neutralization of stimulating monetary conditions for targeting inflation still remains in mid-term perspective.
As a result, inflation is expected to remain at a low level in the next few months around 4%.
If risks of deviation from projected indicators emerge, the central bank will be correcting its monetary policy ensuring stability to prices.
In March 2017, the central bank ceased the relaxation of the monetary policy setting the key refinancing rate at 6%. -0—
