YEREVAN, February 11. / ARKA /. The Central Bank of Armenia said it has cut the key refinancing rate today by 0.25 percentage points to 7.5%.
The regulator said also inflation in January rose by 2.8% making the 12-month inflation 5.5%. According to the Central Bank, inflation has been falling in recent months more rapidly than expected due to lower than planned economic activity and a decrease in international prices of basic foodstuffs.
The Central Bank said also its Board believes that the 12-month inflation in the coming months will continue to decline, particularly in the third quarter, to reach the lower target threshold of allowable fluctuation range due to the elimination of the impact of rising energy tariffs in July 2013.
The Board also said that external processes were mainly within the forecast horizon amid slow global growth recovery trend with non-inflationary environment preserved at commodities market along with deflation at international food markets.
According to the Board, despite some revitalization of the economy in the fourth quarter, economic growth rate is still low, due mainly to decline in construction sector. The Board believes that the weakening monetary conditions, along with expansion of fiscal policy in the second half of 2014 and stabilization of private investment will lead to increased aggregate demand and restore inflation.
The Board believes that there are significant uncertainties in the context of external and internal economic processes, based on which the regulator will clarify the future direction of monetary policy to secure achieving the inflation target in the medium term.
The last time the CB changed refinancing rate was on the 24th of December 2013, reducing it by 0.25 percentage points to 7.75%. The government expects inflation this year to be 4 % (± 1,5%), and GDP to grow by 5.2%. -0-