Central bank chairman: uncertainty associated with inflationary expectations persists

YEREVAN, August 3. /ARKA/. There is still some uncertainty in Armenia associated with inflationary expectations, said Chairman of the Central Bank Martin Galstyan today after the regulator has raised the key refinancing rate by 0.5 p.p. to 7% in a bid to curb inflation, which remains well above the regulator’s target.

“We believe that the relative stability in the post-election period (the June 20 snap parliamentary elections) has had a positive effect on the economy, but we see that households still have some uncertainty associated with inflationary expectations and also because of incidents on the Armenian-Azerbaijani border,” he said at a press conference.

According to Galstyan, the Central Bank’s Executive Board believes that amid the ongoing uncertainty, the risks of inflation deviating from the forecasted medium-term vector are balanced.

“The regulator is ready to respond adequately to such manifestations to ensure price stability,” he stressed.

Director of the Central Bank's Macroeconomic Department Armen Nurbekyan, in turn, said that serious uncertainty also remains in the external sector, associated with the final solution of the coronavirus crisis, and this generally affects the economies of the countries.

“In particular, there are serious questions in the commodity markets regarding how long inflationary expectations will persist and how quickly economic growth will recover,” he said.

According to official data, in 2021 June prices in Armenia dropped by 0.8%, compared to 1.4% deflation in the same month of 2020, as a result the 12-month inflation increased to 6.5%, well above 4% target, set by the government and the Central Bank for 2021.

According to the regulator, the 12-month natural inflation also continued to accelerate, rising to 7.8% at the end of June. -0-