The Situation is at the Expense of Russians: Central Bank President on Inflation Risks

The Central Bank of Armenia's restrictive policy, along with the decline in global prices, will lead to a mitigation of inflationary pressures. This statement was made today by Central Bank President Martin Galstyan during a press conference.

“In the first quarter of the current year, economic growth is slowing down globally, including in Armenia's key economic partner countries. At the same time, the demand for goods and services remains high. This situation continues to persist at the expense of Russians and other foreign citizens who are temporarily residing in Armenia. As a result, wages in the service sector have increased, but this fact only deepens the risks of inflation, as wages are rising without an increase in productivity,” said Galstyan.

According to him, the combination of these factors compels the Central Bank to exercise caution, meaning that it will not lower the key interest rate.

Galstyan noted that there is also activity in the construction and related sectors (such as the production of building materials) within Armenia's economy. Inflationary pressures are also present at the global level, including in the United States. All of this creates expectations for an increase in the tightening of monetary conditions in the U.S., and subsequently, a chain reaction globally.

It is noteworthy that the Central Bank of Armenia has decided to keep the refinancing rate unchanged at 10.75 percent.