Armenia Central Bank forecasts 12-month inflation will gradually decrease




YEREVAN, JUNE 14, ARMENPRESS. The Board of the Central Bank of Armenia decided to keep the refinancing rate unchanged during today’s session, setting it at 9.25%, CBA Governor Martin Galstyan said at a press conference, stating that in May 2022, the 12-month inflation has increased, comprising 9.0%. The 12-month normal inflation has also increased, comprising 8.4%.

Martin Galstyan said that the Russian-Ukrainian conflict continues negatively impacting the economic and financial market developments of Armenia’s main partner countries.

“Continued disruptions of world value chains and constant increase in prices in international commodity markets lead to the expansion of global inflationary environment. The central banks of developed countries are announcing a tightening of a monetary-credit policy at relatively faster rates. Therefore, the inflationary impact from the external sector on Armenia’s economy is still maintained”, he said.

The CBA Governor said that the high activity of the Armenian economy is maintained in the second quarter of 2022. The major inflow of foreign visitors and the growth in domestic private spending contribute to the increase in services and the whole demand. This leads to the expansion of the overall inflationary environment and the increase in inflationary expectations. The major growth in export of Armenian services and the financial inflow contributes also to the devaluation of the dram in the exchange market. The latter is assessed to have a positive effect in easing the domestic inflationary environment.

“In such situation the Board finds it appropriate to keep the policy rate unchanged”, he said, adding: “It is forecast that the 12-month inflation will gradually decline and approach the targeted 4% in the medium-term horizon”.