YEREVAN, March 18. /ARKA/. The Central Bank of Armenia, amid great uncertainty in the world and given its commitment to the right policy, was able to leave the refinancing rate unchanged in order not to fall into a time crunch during this period, but to take a pause to understand what is going on around and pursue a more reasonable policy in the future, the head of the regulator Martin Galstyan told a press conference on Tuesday.
On March 18, the Central Bank’s Board ended the current refinancing rate cut cycle for the first time since June 2023, leaving it unchanged at 6.75%.
“Today’s decision is in line with the majority of expectations in the market – we left the rate unchanged, fixing the existing balance between the risks of scenarios A and B,” Galstyan said.
In the scenario A considered by the Central Bank Board, underlying uncertainties, including those related to the country risk premium in the context of geopolitical events and the resulting macroeconomic implications, require a higher interest rate trajectory than market expectations to ensure the price stability objective. Scenario B considers a prolonged persistence of uncertainty surrounding US economic policy, the formation of downside risks due to lower confidence in the global economy, weakening demand in Armenia, implying a path of faster and larger rate cuts than market expectations to manage demand over the medium term and stabilize inflation near target.
“Since today, according to our assessment, these two scenarios balance each other, we decided to leave the rate at the same level to observe the direction of development,” the Central Bank governor said.
According to him, this does not mean that a level has been reached below which the rate cannot be lowered.
“The rates can be lower, at the same level, and higher – depending on which scenario will prevail,” Galstyan explained. -0-
