The Board of the Central Bank of Armenia has outlined the main reasons behind its decision to lower the refinancing rate by 0.25% to 7.5%. Key factors included economic development trends and changes in the assessment of country risk.
Amid high uncertainty, the Board considers multiple scenarios in its effort to ensure price stability. On one hand, scenarios were discussed that would require a tighter monetary policy than market expectations due to uncertainties related to country risk premiums and the neutral interest rate.
On the other hand, scenarios were considered where potential easing in labor market conditions and the development of a weak demand environment could lead to a prolonged period of low inflation.
After weighing the risks in both directions, the Central Bank Board decided to continue a gradual reduction in interest rates at a slow pace. The regulator will continue to monitor economic scenarios and is ready to take appropriate measures to ensure the medium-term inflation target of 4% and maintain price stability.
Earlier, BMG reported that on September 10, the Board of the Central Bank of Armenia decided to further reduce the refinancing rate by 0.25 percentage points, setting it at 7.5%. According to the regulator, the lombard repo rate was set at 9%, and the rate on funds attracted from banks at 6%.
