Central Bank of Armenia cuts refinancing rate by 25 basis points after 4–3 vote

The Central Bank of Armenia published the minutes and Board members’ vote submissions from its 16 December 2025 policy meeting in its Q4 2025 Transparency Report, showing a decision to reduce the refinancing rate by 25 basis points to 6.50% amid significant uncertainty and with the aim of meeting its 3% medium-term inflation objective. Surveys cited in the minutes indicated financial market participants expect the policy rate to gradually decline to 6.25% over the next eight decisions. The Board weighed “Case A” scenarios pointing to a tighter stance than markets price, including higher global neutral rates, geopolitical uncertainty, uncertainty about the sustainable country risk premium, and demand or supply factors that could keep inflation persistently higher, against “Case B” scenarios implying a faster easing path on weaker global and domestic demand and a gradual real estate adjustment. Members noted year-on-year inflation slowed sharply in November as earlier supply-driven pressures eased, alongside declining global food prices since September and oil supply outpacing demand, while lending activity remained high and increased liquidity and a downward move in the yield curve could ease financial conditions; fiscal risks were seen as having weakened on strong revenues and planned 2026 consolidation, though uncertainty remained about late-year spending. Governor Martin Galstyan and three other members supported the cut, while three members voted to keep the rate unchanged at 6.75% given the balance of risks. The Board said it will continue to monitor risks and stands ready to take further action to ensure 3% inflation over the medium term.