YEREVAN, October 30. /ARKA/. The board of the Central Bank of Armenia decided Tuesday at its meeting to leave the key refinancing rate unchanged – at 5.5%, the press office of the regulator reports.
A 0.2% inflation was recorded in the country in September 2019 against the 0.3% reported in the same month a year before. As a result, the 12-month inflation remained almost unchanged standing at 1.1% by the end of the month.
Some slowdown remains in the global economy’s growth, which is reflected also on international commodity and raw materials markets. Under such circumstances, central banks of the countries which are key partners to Armenia continue easing monetary conditions. The central bank’s board expects no inflation pressures from the outside.
The board members think that Armenia’s economic activity was high, as projected, due to increase in productivity. Domestic demand remained high throughout the quarter as well due to growth in private consumption, and this is being fueled by monetary things and considerable injection of cash liquidity.
At the same time, despite the some expansive impact recorded in the third quarter, the influence of the tax and budgetary policy on the gross demand is being considered as restraining from the beginning of this year.
Taking into account developments in the outside sector and the expected stimulating implementation of the tax and budgetary policy as well as continuing to prefer a gradual recovery of inflation, the central Bank board finds it reasonable to leave unchanged the present size of stimulation of monetary conditions and the present refinancing rate.
The board members also think that under the circumstance of the projected macroeconomic developments it will be necessary to keep the stimulating position also in the medium term for reaching the projected inflation.
As a result, inflation is expected to be at the lower benchmark of the projected frames in the next few months, and will gradually move to the target in medium term. Now risks of the inflation downward deviation from the projected frames remain mainly due to outside developments and the tax and budgetary policy. The regulator is ready to react to risks, if any, in due way and to ensure mid-term stability of prices.
The Central Bank of Armenia has downed the refinancing rate twice over this year. The rate was driven 0.2 percentage points down to 5.75% on January 29 and 0.25 p.p. down to 5.5% on September 10.
Before that, the central bank changed the rate in March 2017, setting it at 6%, to cease the relaxation of the monetary policy. -0—
