Central Bank of Armenia plans to reduce the inflation target to 3%

YEREVAN, October 29. /ARKA/. The Central Bank of Armenia is considering lowering its inflation target from the current 4% to 3%, as it has "built up enough muscle mass for this," stated the head of the regulator, Martin Galstyan.

"Inflation affects all rates in the country. If we can manage inflation at 3% instead of 4%, it will create an environment where we can reduce the costs associated with high rates," Galstyan said at a press conference on Tuesday.

Galstyan emphasized that the current monetary policy framework is among the best in the world. "Our maturity and the trust in our policy indicate that we should be addressing more complex problems alongside other players in a different league. We are ready to accept this challenge," he added.

In response to questions about the tasks under discussion, Galstyan noted that managing inflation at 2-3% differs significantly from managing it at 4-5%.

"The opportunities for action are broader in the former scenario. We have become seasoned enough to play in this league," he explained.

He also mentioned that professional discussions are ongoing with government colleagues, including several meetings with representatives from the Ministry of Finance.

"However, there is also a political component to consider. Low inflation has positive effects, but high inflation results in higher nominal state income, which complicates the timing of policy implementation," he concluded.

Inflation Figures and Forecasts

The inflation rate set in Armenia's state budget for 2024 is 4% (±1.5%). In September 2024, the 12-month inflation rate was 0.6%. According to the Central Bank's report on monetary policy for the third quarter of this year, inflation in Armenia is expected to be between 2.1% and 2% by the end of 2024, with forecasts for 2025 at 4-3.2%, for 2026 at 4.2-3.8%, and for 2027 at 4%. -0-