Central Bank is honest in its messages

The Central Bank of Armenia left the refinancing rate unchanged at 6.75%. Earlier we already discussed the scenario of possible keeping the interest rate unchanged. At the same time, numerous uncertainties caused this decision. During a meeting with reporters, the Central Bank board addressed these uncertainties and conveyed additional messages.

In its statements, the Central Bank highlighted ongoing inflationary trends in key partner countries, as well as global trade tensions. Due to these factors, Armenia is already facing weak external inflationary pressures.

Regarding inflation, the Central Bank views the current price increases as primarily driven by seasonality rather than demand. While seasonality does have a significant impact today, uncertainties about external economic signals lead to the possibility that inflation may persist.

The board also touched upon the growth of the economy, in particular, the fact that growth is largely driven by temporary factors, raising concerns about sustainability in the long term.

We cannot rule out the possibility of an undesirable scenario in which there will be a decrease in demand. Simply put, the current economic activity as well as the purchasing power of people would decline. Due to this circumstance, a decrease in loan interest rates is also possible.