Armenia’s central bank left its benchmark refinancing rate at 6.0 percent – unchanged since February 2017 – and confirmed that it still expects to gradually neutralize the current monetary stimulus to control inflation.
After cutting its rate 12 times by a total of 450 basis points from August 2015, the Central Bank of Armenia (CBA) has said since November 2017 that it will be tightening at some point.
But inflation slowed to 2.4 percent in April from 3.7 percent in March on a seasonal decline in food prices.
CBA targets inflation at a midpoint of 4.0 percent, plus/minus 1.5 percentage points and expects inflation to remain in the lower part of its target range in coming months as no additional inflationary pressures are expected, inflation expectations have stabilized and global inflation is weak.
The risks to the inflation outlook are considered balanced and inflation in 12 months is seen within its target range.
CBA’s second quarter inflation report will be published on May 30.
Relative high economic activity was maintained in the first quarter of this year, supported by high domestic demand but this growth is expected to slow down and stabilize in the second quarter.
Armenia’s dram has eased this month and was trading at 484.6 to the U.S. dollar today, down 0.1 percent this year.
Last month the CBA added financial stability to its main objective in addition to price stability like many other central banks in the wake of the global financial crises.
In the last decade it became clear that low inflation and moderate economic growth does not prevent the build-up of highly volatile financial cycles that can trigger economic instability.
Armenia maintains rate, still sees gradual tightening