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YEREVAN, MARCH 17, ARMENPRESS. During today’s session the Board of the Central Bank of Armenia made a decision to reduce the refinancing rate by 0.25%, setting it at 5.25%, the CBA told Armenpress.
In February 2020 0.2% deflation was registered in the Republic, compared to the 0.6% inflation in February 2019. In such circumstances the 12-month deflation comprised 0.5%.
The spread of the novel coronavirus around the world negatively affects the global economy and the economic growth of partner countries. There are growing uncertainties in the global financial markets which were reflected with the continuous decline in stock indices of developed countries, decrease in prices of raw materials, devaluation of exchange rates of developing countries, and the impact of these developments on Armenia’s economy is estimated to be deflationary.
According to the CBA estimations, these effects are also reflected in simultaneous reduction of gross supply and demand in the behavior of Armenia’s economy. The impact is mainly on services field, especially those sub-fields linked with tourism and entertainment. According to the CBA’s main scenario, the economic growth will greatly slow down in the short run, but will not affect the long-term prospects of the country’s economic potential.
By discussing the economic developments the CBA Board assesses that in such condition the monetary-credit policy’s role is limited as the tools of this policy do not have an opportunity to affect the growth of a real economic uncertainty caused by healthcare problems, as well as the developments of separate parts of the economy. In such circumstances it’s important to maintain the country’s macroeconomic stability which will allow to ensure the efficiency of targeted actions of the economic policy that is being developed by the Government.
The Board finds that thanks to the low inflationary policy conducted in recent years, the inflationary expectations currently are quite anchored, therefore the Board finds its appropriate to reduce the refinancing rate by 0.25 percentage point based on the CB price stability goal, as well as taking into account the current inflationary developments and global economic uncertainties. As a result, the inflation in upcoming months will be maintained at a relatively low level, by gradually approaching to the target in the future.
At the same time, the Central Bank of Armenia conducts daily monitoring of the economy and the financial markets, discusses various alternative scenarios and is ready to respond to any development by ensuring the stability of prices in the Republic.
Edited and translated by Aneta Harutyunyan