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Annual CPI inflation decreased in Q4 2025, reaching 3.3% in December.
Meanwhile, annual core inflation accelerated to 4.3% year-on-year, Central Bank Governor Martin Galstyan said.
Earlier today, the Board of the Central Bank of Armenia decided to keep the refinancing rate unchanged at 6.50%.
Galstyan also highlighted that economic activity in Armenia accelerated in the fourth quarter of 2025.
According to the Central Bank Executive Monetary Policy Statement published today, in the first quarter of 2026, risks of a further slowdown in demand conditions in the global economy and in Armenia’s key partner economies persist. Consumption in the U․S. continues to drive relatively high economic growth and an elevated inflationary environment. Nonetheless, the structural characteristics of economic growth reflecting the developments in the technology sector, as well as risks of a further correction in financial asset prices and weakening labor market, could negatively impact the medium-term growth outlook. The macroeconomic implications stemming from U.S. trade policy have weakened, but continues to remain one of the main sources of uncertainty. Uncertainty regarding the medium-term implications of U․S․ fiscal policy, including the impact of rising public debt on long-term interest rates persists. In Armenia’s other main trading partner economies, risks of medium-term weakening growth and demand are beginning to materialize. Global oil prices continue to decline, while in recent months global food markets have been transmitting predominantly disinflationary pressures. However, geopolitical uncertainty and tensions in international trade relations remain a key source of global price volatility. In this context, considering weakening demand conditions on օne hand and persistent inflationary risks on the other, central banks in major economies would be expected to either maintain or ease monetary conditions gradually.
According to the Central Bank, in the fourth quarter of 2025, economic activity in Armenia accelerated. High economic activity continued to be driven by growth in the construction and services sectors, as well as the impact of certain short-term, non-structural factors in the manufacturing sector. Uncertainty remains elevated regarding the demand outlook. In this context, demand continues to have a neutral impact on inflation, while current inflation developments have been partly driven by certain supply-side factors. In parallel, wage growth, services and sticky price inflation, and inflation expectations continue to stabilize. In the short term, risks of demand pressures from fiscal policy persist. In the context of current macroeconomic developments, financial market participants in Armenia generally expect the Central Bank of Armenia to gradually lower the policy rate in the medium term to 6.25%. Amid high uncertainty, the Central Bank Board discussed, on the one hand, Case A-type scenarios related to a possible rise in global neutral interest rates driven by fiscal policy, as well as the formation of excess demand conditions in the domestic economy, which would require a higher policy rate path relative to market expectations. On the other hand, the Central Bank Board also discussed Case B-type scenarios including concerns regarding the outlook for a slowdown in global economic growth and the formation and deepening of a weak demand environment in Armenia’s economy, which would imply a lower policy rate path relative to market expectations. As a result, balancing the need to manage risks in both directions, the Board of the Central Bank of Armenia decided to keep the policy rate unchanged, in line with market expectations. The Board resolutely affirmed its commitment to adopting the appropriate policy actions and strategy to ensure the price stability objective of 3% inflation in the medium term.