The Central Bank of Armenia published its November transparency report, detailing a decision approved by six votes to two to raise the policy rate by 25 basis points to 7.0%. The majority judged that persistent excess demand and external price pressures warranted tighter monetary policy, with inflation remaining above the 3% target for the medium term. Strong consumption, construction activity and credit growth were supporting domestic demand. Rising services inflation and inflation in nontraded items with sticky prices indicated persistent domestic pressures. Higher global energy and food prices, alongside elevated freight and maritime insurance costs, posed further inflation risks. Continued excess demand could amplify the transmission of these external pressures into domestic prices. Deputy Governor Armen Nurbekyan and board member Armen Ktoyan voted to leave the rate unchanged, favoring a more balanced assessment of inflation and growth risks. Their concerns included uncertainty over economic relations with Russia, restrictions affecting Armenian exports and the concentration of domestic growth in certain sectors. The deliberations also highlighted a policy complication: higher interest rates could attract additional capital inflows, limiting their ability to tighten financial conditions and restrain demand.
Central Bank of Armenia raises policy rate by 25 basis points to 7.0% amid persistent inflation pressures
The Central Bank of Armenia increased its policy rate by 25 basis points to 7.0% in a vote of six to two, as detailed in its November transparency report. The majority prioritized persistent excess demand and external price pressures, with inflation above the 3% target. The two dissenters favored holding rates, citing risks associated with economic relations with Russia and the concentration of domestic growth in certain sectors.