Inflation Will Remain High Until Year-End, Central Bank President

The Central Bank’s council decided to keep the refinancing rate unchanged at 7.25%. This was announced today by Central Bank President Martin Galstyan.

He noted that a 0.1% deflation was recorded in September of this year, compared to a 2% deflation in the same month last year, resulting in a 12-month inflation rate that remained unchanged at 8.9%.

Despite the active spread of the coronavirus, according to Martin Galstyan, economic activity and the recovery of aggregate demand continue in Armenia’s partner countries. The Central Bank President stated that the 12-month inflation rate will remain high until the end of the year, afterwards approaching the target rate of 4% in 2022 and stabilizing around that figure in the medium term.

Galstyan emphasized that we were the first Central Bank in the region to raise the refinancing rate last December when inflation in Armenia was at 3.1%. “Based on our forecasts, we decided to increase the rate. If we now look at the Central Banks of neighboring countries, they continue to raise their rates; for example, in Russia it has already reached 7.5%. Based on our forecasts, we do not rule out that inflation will continue to rise somewhat in October and November, but we anticipate that during the next year, the most likely timeframe will be the end of the second quarter, when we will approach our target rate. This will be somewhat influenced by base effects,” he stated.