YEREVAN, APRIL 28, 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 5.0%, the CBA told Armenpress.

In March 2020 0.5% inflation was registered in the Republic, compared to the 0.1% inflation in March 2019. In such circumstances the 12-month deflation was cut and comprised 0.1%.

The spread of the novel coronavirus and the healthcare measures for its prevention greatly and negatively affect the global economy, including the economic growth of Armenia’s partner countries, as well as have increased the fluctuation of raw material and food prices. Although the fluctuation of financial markets mitigated with the joint efforts of the central banks of leading countries, uncertainties and risks still remain at a high level. It’s estimated that this process will have a deflationary impact on Armenia’s economy.

Due to the negative impact of the coronavirus pandemic, economic activity in almost all spheres of the economy was declined in March 2020 compared to March 2019. According to the Bank’s forecasts, the decline in economic activity will deepen in the second quarter conditioned by the decline in both the demand and the supply. It’s estimated that the gross demand will also remain weak in the future, but it will be somehow mitigated by the anti-crisis measures taken by the Government of Armenia. At the same time, the uncertainties over the timeframe of overcoming the disease and the restoration of the economy have also grown, and after their minimization only it would be possible to assess more long-term changes of the structure and prospects of the Armenian economy.

Taking into account the ongoing and predicted foreign and domestic developments, the weakening demand, the current low inflationary environment and the stabilization of financial markets, the CBA Board finds it appropriate to increase the amount of promoting the monetary-credit terms, by reducing the refinancing rate.

Currently, uncertainties over short-term and long-term economic developments are quite high, which the Bank is also trying to take into account in its actions. In case of any risks the Bank is ready to clarify its policy respectively by ensuring the price stability in the medium-run. 

Editing and Translating by Aneta Harutyunyan