On October 29, Central Bank of Armenia Chairman Martin Galstyan announced plans to reduce the annual inflation target from 4% to 3%, a move designed to foster an environment with lower interest rates.
“Our monetary policy is among the best globally, and we believe that trust in it is so high that we should be operating at a new level, with different players, ready to take on more complex challenges. And we are ready to meet these challenges,” Galstyan stated.
He highlighted the critical difference in managing inflation at 2-3% versus 4-5%. “With higher inflation, there’s more room for maneuver. In this case, we’re saying that we have strengthened ourselves, built ‘muscle,’ and are prepared to operate at this higher level,” he explained.
Galstyan also emphasized the political dimension of the issue: “Lower inflation has positive effects, but on the other hand, with higher inflation, the nominal revenue for the state is greater. Here, we need to find a balance and determine the right timing for this move.”
The Central Bank underscored that inflation impacts all interest rates in the country, and lowering the inflation target will help reduce expenses tied to high interest rates.
