- Decision
- Maintain
- Rate change
- 0 bps
- refinancing rate
- 6.75%
The Board of the Central Bank of Armenia (CBA) on 6 May 2025 left the refinancing (policy) rate unchanged at 6.75 percent, judging that 12-month headline inflation’s rise to 3.3 percent in March and core inflation’s still-low 2.0 percent, alongside a cooling but uncertain growth outlook, warranted neither immediate tightening nor further easing while it weighs opposing risks to price stability. After a 25 bp cut to 6.75 percent in February, the rate has been held steady at the March and May meetings. The demand environment is viewed as broadly neutral: construction and services continue to underpin activity but earlier one-off growth drivers are fading, external demand for services is softening and labour-market pressures are easing as wage growth stabilises and unemployment hovers near 13 percent, even as fiscal policy could add medium-term inflationary impetus. Externally, Armenia faces weaker global demand, falling commodity prices and a modest rise in its risk premium, while rising U.S. inflation, policy uncertainty, trade frictions and geopolitical tensions cloud the outlook. Although the Board sees downside growth scenarios (Case B) as more probable, it stressed readiness to adjust policy in either direction to keep inflation close to its 3 percent medium-term target.
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.