YEREVAN, August 14. /ARKA/. Armenia’s Central Bank decided today to leave its key refinancing rate unchanged at 6%, saying that 1.2% deflation registered in July this year was down from 2.6% deflation registered for the same month last year. It said also that although the natural inflation fell slightly in July, it was still at a relatively high level.

According to the Central Bank’s estimates, in the coming months the 12-month inflation will approach the projected target. It said then that in light of trade restrictions and sanctions imposed by US and its allies against a number of regional countries the volatility of financial markets will not contain significant risks for the financial market of Armenia, however, if a risk emerges, it will respond accordingly.

The regulator also said the accelerated growth in the processing industry and agriculture in June 2018 has restored economic activity pace after a slowdown at the beginning of the second quarter.

The Central Bank said then that the gross demand will gradually weaken in the near future because of a restraining trend of the fiscal policy, reflected in a significant cost saving compared to the planned figure.
Given the expected developments - a slowdown in domestic demand and a weak inflationary environment in the outside world - the Central Bank said it decided to maintain the stimulating monetary and credit conditions, leaving the current level of the refinancing rate unchanged.

At the same time, given the forecasted macroeconomic indicators and the absence of risks, the regulator considers it important to maintain the stimulating monetary conditions also in the upcoming period on condition that they will gradually neutralize.

As a result, the inflation rate is expected to preserve in the lower range of permissible fluctuations, stabilizing at 4% by the end of the forecast horizon.

In case of risks arising from deviations from the prospects of economic development and the trajectory of inflation recovery, the Central Bank will accordingly adjust the directions of monetary policy to ensure price stability.

In March 2017, the Central Bank suspended the easing of monetary policy, setting the refinancing rate at 6%. -0-