2020 at the session of March 17, the Central Bank Council decided to reduce the refinancing rate by 0.25 percentage points, setting it at 5.25%, the Central Bank informs.
2020 0.2% inflation was recorded in February, against 0.6% inflation in the same month of the previous year, in which case the 12-month inflation was 0.5%.
The ongoing spread of the coronavirus in the world has a significant negative impact on the global economy and the economic growth of partner countries. Uncertainties have significantly increased in the global financial markets, which was expressed by the continuous decline of the stock market indices of developed countries, the decrease in the prices of mineral products, the devaluation of the exchange rates of developing countries, whose impact on the RA economy is estimated to be deflationary.
According to the estimates of the Central Bank, these effects are also expressed in the behavior of the RA economy by the simultaneous reduction of aggregate supply and demand. The main impact is on the service sector, especially the sub-sectors related to tourism and entertainment. According to the central bank scenario, economic growth will slow down considerably in the short term, but will not affect the long-term prospects of the country’s economic potential.
Discussing the developments of the economy, the Central Bank Council assesses that the role of monetary policy in the current situation is limited, as the monetary policy toolkit does not have the ability to influence the growth of real economic uncertainty caused by health problems and the developments of individual sectors of the economy. In this case, it is important to continue to maintain the macroeconomic stability of the country, which will allow to ensure the effectiveness of the targeted measures of the economic policy developed by the Government.
The Central Bank Board considers that due to the low inflation policy implemented in recent years, inflation expectations are currently quite anchored, therefore, based on the Central Bank’s price stability objective, and assessing the current inflation developments, the future effects of the global economy and the resulting uncertainties, the Central Bank Board considers it appropriate to reduce the refinancing rate with 0.25 percentage points. As a result, according to the main scenario, inflation will remain at a relatively low level in the coming months, gradually approaching the target.
At the same time, the Central Bank monitors the economy and financial markets on a daily basis, discusses various alternative scenarios and is ready to respond to any development of the situation, ensuring price stability in the Republic of Armenia.
You can familiarize yourself with the detailed information underlying the determination of the interest rate level until 2020. in the Inflation Report (in the 2020 Q1 Monetary Policy Plan) to be published on March 31.
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