Central Bank keeps refinancing rate unchanged, sets it 6%

YEREVAN, MAY 15, ARMENPRESS. The Board of the Central Bank of Armenia made a decision to keep the refinancing rate unchanged, setting it 6.0% during the May 15 session, the CBA told Armenpress.

0.3% deflation was registered in April 2018, against the 1.0% inflation of April 2017, and in these circumstances the 12-month inflation decreased significantly comprising 2.4%. The CBA Board estimates that the inflation will be maintained in the upcoming months in the lower part of the permissible fluctuations range.

In accordance with the factual developments of April in the external sector, the improvement trends of global economic growth and weak inflationary environmentin some international commodity markets continued. In this context the CBA Board continues expecting inflationary impacts from the external sector in parallel with expanding the foreign demand.

The Board records that a relatively high economic activity has been maintained in the first quarter of 2018, in connection with the high productivity rates recorded in the fields of industry, construction and services. This has also been accompanied by high rates of recovery of the domestic demand and it is expected its growth will certainly slow down starting from the second quarter by gradually approaching to its stable level. The Board believes that the inflationary expectations have stabilized over the past period of the year and additional inflationary pressures are not expected in coming months. At the same time, the CBA Board estimates that the impact of the April-May political events on the financial market has been effectively neutralized thanks to the adequate set of tools used under the CBA independence mandate.

Taking into account the aforementioned, the CBA Board considers it appropriate to keep the current monetary-loan terms. At the same time the Board states that under the predicted developments there will be a need for neutralization of monetary-loan terms aimed at implementing the inflation goal.As a result it is expected that the 12-month inflation will fluctuate in a permissible range, stabilizing over a targeted 4% figure.

In case of deviation risks from economic development prospects and inflation recovery trajectory, the CBA will clarify the monetary-loan policy directions by ensuring the price stability.

English –translator/editor: Aneta Harutyunyan