The Board of the Central Bank of Armenia has decided to keep the refinancing rate unchanged at 6.50%, citing heightened geopolitical uncertainty, persistent inflationary pressures, and risks of slower global economic growth.
In a statement released following its latest policy meeting, the Central Bank said annual consumer price inflation rose to 4.5% in March 2026, while annual core inflation accelerated to 4.7%.
According to the regulator, the global economic environment remains highly uncertain amid increased volatility in energy prices and ongoing geopolitical tensions, particularly in the Middle East. The Bank noted that risks of weakening demand have increased in Armenia’s major partner economies.
The Central Bank said economic growth in the United States accelerated somewhat in the first quarter of 2026, although weaker consumer demand persists. It also pointed to rising risks linked to US public debt and the possibility that elevated long-term interest rates may remain in place for an extended period.
In the euro area, the Bank said economic growth continues to weaken due to structural challenges and vulnerability to energy price fluctuations and supply disruptions. Meanwhile, in Russia, leading indicators point to slowing economic activity and weaker domestic demand.
Despite external risks, economic activity in Armenia remained strong in the first quarter of the year, driven mainly by growth in the construction and services sectors. The Bank also highlighted signs of stronger external demand, particularly an increase in tourist inflows to Armenia amid tensions in the Middle East.
The regulator assessed the overall impact of aggregate demand on inflation as expansionary, while noting that supply-side risks continue to play a significant role in inflation dynamics.
The Central Bank also said risks associated with a more expansionary fiscal policy have somewhat eased, while wage growth in the private sector and inflation expectations are showing stabilizing trends.
According to the statement, financial market participants generally expect the Central Bank to gradually lower the policy rate to 6.25% in the medium term.
The Board discussed scenarios involving both higher and lower future interest rate paths, including risks related to stronger domestic demand and fiscal expansion, as well as the possibility of slower global growth and a decline in Armenia’s risk premium.
Balancing these risks, the Central Bank decided to leave the refinancing rate unchanged and reaffirmed its commitment to ensuring medium-term price stability and maintaining inflation around the 3% target.
