On December 10, the Board of the Central Bank of Armenia decided to lower the refinancing rate by 0.25 percentage points, setting it at 7.00%. Additionally, the lombard repo rate was set at 8.50%, and the deposit rate at 5.50%.
According to the Central Bank, annual inflation during the fourth quarter of 2024 remained below the target level, registering 1.4% in November, while core inflation was 0.6% in October.
Economic growth risks persist both globally and in Armenia’s key partner countries during the fourth quarter of 2024. Despite a global slowdown in inflation, prices for goods and services characterized by rigid pricing remain relatively high in partner countries. Risks related to rising commodity prices and potential disruptions in supply chains continue, driven by geopolitical tensions and growing strains in international trade relations.
In light of these developments, leading central banks are expected to gradually ease monetary policy, albeit at a slower pace than previously anticipated, maintaining relatively tight financial conditions. As a result, the Armenian economy is projected to experience mild inflationary pressures from external factors.
The Central Bank Board emphasized its commitment to monitoring economic developments and is prepared to take appropriate measures to ensure price stability and achieve the medium-term inflation target of 4%.
During the fourth quarter, Armenia’s economic activity approached the estimated level of long-term stable growth. Economic expansion was largely supported by robust growth in the construction, services, and trade sectors. However, short-term factors have influenced growth, adding uncertainties regarding long-term sustainability and future trends in domestic demand.
External demand for services continues to adjust, which has contributed to a slight weakening of labor market conditions. This has been reflected in lower wage growth, reduced inflation in rigidly priced services, and decreased inflation expectations. Concurrently, fiscal policy risks remain, with potential for additional demand stimulus.
