Armenia cenbank inclined to further reduce monetary policy

 16:34,

YEREVAN, SEPTEMBER 15, ARMENPRESS. Shortly after the Central Bank announced that it is cutting the refinancing rate by 0,25 pp and setting it at 4,25, its President Martin Galstyan said at a news conference that 0,1% deflation was recorded in August 2020 against the August 2019’s 0,4%. He said the 12-months inflation to some extent grew and comprised 1,1%.

Given the low inflation environment, as well as certain delay of external and domestic demand’s restoration, the cenbank board found it appropriate to cut the refinancing rate.

In the event of expected economic development the board is inclined to further reduce monetary policy.

“Let me say that during Q3 the external sector is recording certain restoration of global economy, however it is assessed that the uncertainties regarding the final overcoming of the pandemic will significantly suppress and delay the restoration of complete demand and economic activity in Armenia’s main partner countries,” he said. The cenbank assesses that the external sector won’t display inflation impact on the Armenian economy.

In Q1 the factually recorded economic growth in Armenia was within the framework of the cenbank’s projections. Galstyan said the low indicator of economic activity in July 2020 was associated with the services sector being cut.

“In light of the mentioned developments, the lasting big uncertainty regarding the timeframes of when the pandemic will be overcome and the society’s cautious consumer and investment behavior in this regard, it is assessed that the domestic demand and economic activity in the coming quarters will be restored slower than expected,” he said.

Editing and Translating by Stepan Kocharyan

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