- Decision
- Lower
- Rate change
- 25 bps
- refinancing rate
- 6.75%
The Board of the Central Bank of Armenia (CBA) cut the refinancing (key policy) rate by 25 bp to 6.75 % on 4 February 2025, judging that further monetary easing is required to bring inflation back to its 3 % medium-term target after headline CPI slowed to 1.5 % y/y and core inflation to 1 % in December 2024. The Bank noted that economic activity in Q4 2024 decelerated toward its long-term pace, driven by services, construction and trade, while labour-market conditions softened and wage growth normalised. External demand is losing strength as tourist inflows and remittances from Russia level off, although the country risk premium has narrowed recently despite lingering geopolitical and fiscal uncertainties. Weak imported inflation and declining prices for non-food imports are offset by risks from global trade tensions, sticky service inflation in partner economies and potential commodity-price shocks. Balancing scenarios that could require either a higher or lower rate path, the CBA signalled it will continue a gradual easing bias but stands ready to adjust policy to secure its 3 % inflation goal over the medium term.
Rate evolution
After keeping the policy rate at 6.75% through a prolonged pause, during which it noted high activity in construction and services and a recovery in external demand but judged demand to be neutral for inflation, the Central Bank of Armenia cut it by 25 basis points to 6.50% in December. It balanced risks from stronger demand, a higher neutral rate and global inflation against weaker global or domestic demand, a real-estate adjustment and a lower neutral rate.
The December cut followed a decline in annual CPI inflation to 3.1% in November and weaker fiscal demand risks, while the Board continued to flag uncertainty around global growth, United States trade and fiscal policies, and external and domestic demand. On February 3, 2026, the Central Bank of Armenia held the policy rate at 6.50% as annual CPI inflation declined to 3.3% in December while annual core inflation accelerated to 4.3%, economic activity strengthened and demand remained neutral for inflation. It maintained the rate on March 17 and May 5 as annual CPI inflation reached 4.5% in March, core inflation stood at 4.7%, and strengthening domestic and external demand made aggregate demand expansionary, then held again on June 16 and August 4 as inflation and core inflation remained elevated and it weighed excess demand and inflation expectations against weaker global growth, export-market difficulties and a lower country risk premium. On September 15, the Board raised the policy rate by 25 basis points to 6.75% as 12-month inflation remained above target at 4.4% in August and core inflation stood at 4.8%, prioritizing risks from excess domestic demand, expanding external demand and rising inflation expectations while noting weaker global growth, disinflationary risks from export restrictions to Russia and a lower country risk premium.