- Decision
- Maintain
- Rate change
- 0 bps
- refinancing rate
- 6.75%
The Board of the Central Bank of Armenia (CBA) on 16 September 2025 left the refinancing rate at 6.75 percent, judging that balanced demand conditions and recently supply-driven upticks in headline (3.6 percent) and core (3.7 percent) inflation warranted neither immediate easing nor tightening while it seeks to secure its 3 percent medium-term price target amid heightened global and fiscal uncertainty. After a 25 bp cut in February, the rate has been held at 6.75 percent at every meeting since March. The CBA noted that market pricing still looks for a gradual reduction toward 6.25 percent over the coming year but weighed “Case A” scenarios—rising neutral rates, stronger demand or fiscal stimulus—against “Case B” risks of a sharper growth slowdown and potential deflationary pressures before opting for a steady stance. Domestic activity remains firm, with GDP up 5.9 percent y/y in Q2 on robust construction and services, while unemployment at 13.9 percent and wage growth of 5–6 percent point to stabilising labour conditions that are currently neutral for inflation. External demand for services has picked up, supported by a rebound in tourism, yet the Bank warns that global food price increases, persistent geopolitical and trade tensions, and uncertain US fiscal policy could reignite inflation via supply-chain strains even as worldwide demand softens. The Board reiterated its readiness to alter policy in either direction as needed to keep inflation at 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.