Central Bank of Armenia Holds Refinancing Rate at 6.50%

The Central Bank of Armenia held its refinancing rate at 6.50% in May, balancing above-target inflation and expansionary domestic demand against risks of weaker global growth and lower country risk premiums. Over the past year, it held the rate at 6.75% through November 2025, cut it by 25 basis points in December and has kept it at 6.50% since. Annual consumer price inflation rose to 4.5% in March, with core inflation at 4.7%, above the 3% medium-term target. Economic activity remained strong at about 6.6% in March, led by construction and services, while robust lending and private consumption pointed to firm domestic demand. The global outlook deteriorated amid heightened geopolitical uncertainty, elevated and volatile energy prices, weaker demand in key partner economies and risks that major central banks keep rates unchanged for longer or tighten policy. The Board said higher global neutral rates or domestic excess demand could require a higher rate path, while weaker global growth or a fundamental decline in Armenia’s risk premium could warrant a lower path, and reaffirmed its commitment to price stability.