YEREVAN, DECEMBER 1, ARMENPRESS. The Armenian Central Bank lowered the re-financing rate by 1,25% from Q4 2019 to Q3 2020, bringing it to 4,25% as of September 2020, the cenbank said in a report.

According to the report, a low deflation climate was maintained in Armenia during the 1 year preceding Q4 2020 associated with supply and demand factors. Namely, in Q4 2019 and Q1 2020 the government implemented suppressive fiscal policy, while “mostly deflation effects were conveyed from the outside world.”

“The low inflation was also contributed by the changes in the competitive arena observed in a number of product markets and the shift of demand from the short-term consumption product market to the long-term consumption product market,” the cenbank said, adding that a comparable high growth was recorded in private consumption, mostly due to positive crediting impact from the financial sector.

Significant deflation factors appeared in Q2 and Q3 of 2020, mostly due to the COVID-19 pandemic, the response actions and the developed behavioral changes.

Despite significant encouraging fiscal policy, the situation led to a significant drop of economic activity and gross demand mostly due to decrease of private consumption and delay of investments amid uncertainties over economic prospects.

12-months inflation totaled 1,4% in September 2020.

Editing and Translating by Stepan Kocharyan