Refinancing rate left unchanged at 6.75% - cenbank

At its November 4, 2025 meeting, the Board of the Central Bank of Armenia decided to:

• Keep the Refinancing Rate unchanged at 6.75%
• Keep the Lombard Repo Facility Rate at 8.25%.
• Keep the Deposit Facility Rate at 5.25%.

Annual CPI inflation increased slightly in Q3 2025, standing at 3.7% in September, the Central Bank of Armenia said in the Executive Monetary Policy Statement

Meanwhile, core inflation edged up, standing at 3.5% Y-o-Y in August. In Q3 2025, risks of a further slowdown in demand conditions globally and in Armenia’s key partner economies persist, while inflationary pressures in the US have intensified. Uncertainty surrounding US trade policy and its macroeconomic implications remains elevated.

Uncertainty regarding the medium-term implications of US fiscal policy, including the impact of rising public debt on long-term interest rates persists. Consumption in the US continues to drive relatively high economic growth and an elevated inflationary environment. However, risks of a correction in asset prices and labor market weakening could negatively impact the medium-term growth outlook. At the same time, in Armenia’s other trading partner economies, risks of weakening growth and demand are beginning to materialize. Oil prices continue to decline amid growing supply and weakening global demand, while food prices have shown some signs of softening. However, geopolitical uncertainty and tensions in international trade relations remain a key source of global inflation volatility. In this context, considering weakening demand conditions on the one hand and persistent inflationary risks on the other, central banks in major economies would be expected to either maintain or gradually ease their tight monetary stance. In the third quarter of 2025, economic activity in Armenia continued to accelerate. Demand continues to be driven by growth in demand-driven sectors as well as the impacts of certain short-term, non-structural growth drivers. Sustained, robust growth in the construction and services sectors has remained the key driver of overall economic activity. Following sustained declines in 2024 and Q1 2025, external demand for domestic goods and services has increased in Q2 and Q3. At the same time, uncertainty remains elevated regarding the future outlook for domestic demand. In this context, demand continues to have a neutral impact on inflation, while recent increases in headline and core inflation have been driven by supply-side factors.

Wage growth, nontraded sticky price inflation, and inflation expectations continue to stabilize. At the same time, risks for short- and medium-term demand pressures from fiscal policy persist. In the context of current macroeconomic developments, financial markets in Armenia generally expect the Central Bank of Armenia to gradually lower the refinancing rate over the next twelve months to approximately 6.25-6.50%. Amid high uncertainty, the Board discussed, on the one hand, Case A-type scenarios where possible underlying developments would require a higher path for the policy rate relative to current market expectations. This includes scenarios related to risks of a rising neutral rate globally and in Armenia in the context of fiscal policies, as well as risks of expanding demand conditions. On the other hand, the Board also discussed Case B-type scenarios where potential economic developments imply a more rapid and aggressive downward path for the policy rate than what is currently priced in markets. These scenarios include concerns regarding overall concerns about the outlook for the global economy as well as a weak demand environment forming and deepening in the economy due to a potential gradual adjustment of real estate prices. Seeking to manage the macroeconomic implications that could stem from Case A-type scenarios materializing, the Board finds it appropriate to keep the policy rate unchanged in the current round. The Board resolutely affirms its commitment to adopting the appropriate policy actions and strategy to ensure the price stability objective of 3% inflation in the medium term.