- Decision
- Lower
- Rate change
- 25 bps
- refinancing rate
- 6.5%
The Board of the Central Bank of Armenia (CBA) cut the refinancing (policy) rate by 25 bp to 6.50 percent at its 16 December 2025 meeting, citing a dip in headline inflation to 3.1 percent in November—near the 3 percent medium-term target—against a rise in core inflation to 3.8 percent and persistent global demand risks offset by US inflation pressures. After a 25 bp reduction to 6.75 percent in February and six consecutive holds, the policy rate now stands 50 bp lower than at end-2024. The CBA gave no new corridor or liquidity guidance. Domestically, GDP expanded 6.2 percent y/y in Q3 and economy-wide activity grew 10.1 percent in October, with construction and services leading while wage growth and inflation expectations stabilised and fiscal-demand risks easing. Externally, oil and food prices have softened, yet geopolitical and trade tensions keep global inflation volatile and partner-country growth prospects fragile. Balancing scenarios of higher US neutral rates and possible domestic demand strength against risks of weakening partner-economy growth and real-estate adjustments, the Board aligned its move with market pricing and signalled that investors foresee a further gradual easing toward roughly 6.25 percent over the coming year, while reaffirming its commitment to return inflation to the 3 percent target in 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.