YEREVAN, June 30. /ARKA/. The decision of the Central Bank of Armenia to cut the refinancing rate to 4.5% has prompted an increased demand for loans, Central Bank Chairman Martin Galstyan said at a press conference on Tuesday.
According to him, the Central Bank will continue its stimulating policy, but this does not mean that it will lower the refinancing rate any time soon. He said any decision on revising the refinancing rate is preceded by a thorough assessment and analysis of numerous data and factors.
“This time we have cut it by 0.5% instead of the usual 0.25% to stimulate full-fledged demand. The inflation rate that we achieved through long and consistent work was instrumental in making this decision,” said Galstyan.
At the same time, he noted that the refinancing rate is not the only, albeit the main tool, which allows achieving the main goals. Stable macroeconomic environment and inflation are also important, he said.
“But the Central Bank, being consistent in its statements made in March, will provide commercial banks with unlimited liquidity: as much as the banking system needs through our REPO instrument, the volume of which has increased by 4 times in recent weeks. We have provided banks with liquidity and reduced the price, which had a positive effect on overall demand and macroeconomic indicators,” said Galstyan.
He said that lowering the refinancing rate is a universal tool, but the Central Bank does not target a specific area of the economy, although financial markets have already responded both in the form of interbank repo transactions and in the government bond market.
“This affects the formation of interest rates in the financial market, as a result of which there is an increased demand for credit products both in connection with government assistance programs to offset the consequences of the coronavirus shock and lending the banks,” Galstyan said.
The refinancing rate was cut to 4.5% on June 16. Prior to it, the rate was cut by 0.25% on April 28, 2020. -0-
