Armenia's central bank raised its benchmark interest rate for the 8th time, saying the risks of inflation deviating from its projected trajectory are mainly upwards and if these risks materialize, it would respond "accordingly and ensure the goal of price stability."
The Central Bank of Armenia (CBA) raised its refinancing rate by a further 25 basis points to 8.0 percent and has now raised it a total of 3.75 percentage points since it began tightening in December 2020 and followed this up with rate hikes in February, May, June, August, September and December last year and today.
CBA said the latest wave of the COVID-19 pandemic was spreading "rapidly," but its impact on the economy is assessed as weak."
Inflation in Armenia fell to 7.7 percent in December from a 2021-high of 9.6 percent in November but due to rising energy prices and disruptions to supply chains in international commodity and food markets, CBA said there is a persistent high inflationary environment, which is leading central banks in partner countries to tighten monetary conditions faster than expected.
"As a result, the external sector will continue to have an inflationary impact on the Armenian economy," CBA said, adding it considered it appropriate to raise the interest rate further so inflation gradually declines toward the target level of 4.0 percent.
