YEREVAN, June 11 /ARKA/. Armenia’s Central Bank decided today to keep its key refinancing rate unchanged at 5.75%. It said also consumer price index declined 0.4% in May month-on-month but rose 2.56% year-on-year, driven largely by seasonal rises in the prices for a number of agricultural products.
According to the Central Bank, the uncertainty that has resulted from the exacerbating trade wars between world economic leaders has affected also the financial and commodity markets, as well as the economic growth outlook.

Armenia’s Central Bank believes that despite short-term inflationary trends observed in the basic food markets, no significant inflationary pressures are expected from the external sector.

The Central Bank said also the economic growth in the first quarter of 2019 surpassed the projections. The impact of fiscal policy in the first half of the year on domestic demand is assessed as constraining. The demand is expected to expand in the second half of the year as a result of which the fiscal policy will have a neutral effect.

The Central Bank believes that the current low inflation contributes to the strengthening of long-term inflation expectations and the preservation of the purchasing power. In the current situation, the Central Bank gives preference to a gradual restoration of inflation and considers it appropriate to keep the current stimulating size of the monetary conditions, leaving the refinancing rate unchanged.

At the same time, in the context of projected macroeconomic developments, it will be necessary to maintain the incentive position for a longer term to achieve the medium-term inflation target. As a result, inflation is expected to remain below the target.

On January 29 of the current year, the Central Bank of Armenia, for the first time in almost two years, lowered the refinancing rate by 0.25 percentage points to 5.75%. -0-