Central Bank of Armenia follows the path of gradual easing of monetary conditions - Galstyan

YEREVAN, March 12. /ARKA/. The Central Bank of Armenia Board, considering scenarios for changing the refinancing rate, has decided to continue the gradual easing of monetary policy, the head of the regulator Martin Galstyan said today after it lowered the refinancing rate by 0.25 percentage points, setting it at 8.5%.

"The Central Bank's Board believes that lowering the refinancing rate is necessary to achieve the inflation target of 4% in the medium term and stabilize prices," Galstyan said at a press conference on Tuesday.

He noted that under conditions of high uncertainty, the Board is considering several scenarios.

On the one hand, he said, the Board was discussing scenarios in which major developments, including still high inflation expectations as well as uncertainty over the country risk premium, require tighter policy measures to contain domestic demand, anchor inflation expectations and ensure price stability in the medium term.

On the other hand, Galstyan noted, the Board considered scenarios in which possible economic developments, including continued expansion in labor supply and some weakening of demand, would create excess supply, leading to prolonged low inflation.

This, he said, implies a more rapid and significant reduction in the refinancing rate to stabilize inflation at the target level over the medium-term horizon.

"Having balanced the risks in the two aforementioned areas, the Central Bank decided to continue gradual easing at a slow pace," Galstyan said, explaining that the regulator will continue to monitor economic scenarios and is ready to take appropriate measures to ensure 4% inflation and price stability in the medium term.

The current refinancing rate cut is the seventh since last June -0-.