The Central Bank of Armenia published its Q4 2025 Executive Monetary Policy Statement and reduced the key policy rate (refinancing rate) by 25 basis points to 6.50%, judging the move consistent with prevailing market expectations while balancing two-sided risks to inflation and activity. Headline inflation eased to 3.1% year on year in November, while core inflation edged up to 3.8%. The CBA assessed domestic economic activity as still high, driven mainly by construction and services alongside short-term non-structural factors, with external demand remaining strong but uncertainty elevated around the domestic demand outlook; it attributed recent increases in headline and core inflation largely to supply-side factors and noted stabilising wage growth, non-traded sticky-price inflation and inflation expectations, alongside weakening risks of fiscal-policy-driven demand pressures. Markets continue to expect a gradual reduction of the policy rate to around 6.25% over the next twelve months, while the Board reviewed scenarios requiring a higher rate path (including stronger demand and a higher US neutral rate) and scenarios implying faster easing (including weaker trading-partner growth, softer domestic demand and a potential gradual adjustment in real estate prices); it reaffirmed the medium-term objective of 3% inflation.
Central Bank of Armenia 2025-12-16
Central Bank of Armenia cuts refinancing rate 25 bps to 6.50%
The Central Bank of Armenia reduced its key policy rate by 25 basis points to 6.50% in its Q4 2025 Executive Monetary Policy Statement, aligning with market expectations and addressing inflation risks. Headline inflation eased to 3.1% in November, while core inflation rose to 3.8%, with the bank noting strong domestic activity and external demand but elevated uncertainty in domestic demand.