Armenian CB reduces refinancing rate 

ArmInfo. The Central Bank of  Armenia continues to reduce the refinancing rate, this time also by  0.25 percentage points - from 7.25% to 7%. This is the eighth  reduction in the key rate this year, by a total of 2.25 percentage  points (from 9.25% in December 2023). 

The decision to reduce the refinancing rate again was made on  December 10 at a meeting of the Board of the Central Bank of Armenia.  In accordance with this, the rates on Lombard repos have been reduced  by the same amount - from 8.75% to 8.5%, and on deposits attracted  from banks - from 5.75% to 5.5%. 

Thus, over more than a year and a half, the regulator has reduced the  key rate by 3.75 percentage points, in accordance with which the  rates on Lombard repos and on deposits attracted from banks have  decreased by the same amount - from the maximum of 10.75%, 12.25% and  9.25%, respectively, recorded at the beginning of 2023. But for now,  the current levels of the refinancing rate, rates on Lombard repos  and on deposits attracted from banks are far from the minimum levels  of 4.25%, 5.75% and 2.75%, respectively, recorded in the second half  of 2020.

According to statistics, in November 2024, compared to November 2023,  inflation was recorded at 1.4%, against a deflationary 0.5% in  November 2023 compared to November 2022. The baseline indicator of  November inflation calculated by the Central Bank has not yet been  published, but October annual inflation was 0.6%, against zero  inflation a year ago.

The detailed rationale for the decision of the Central Bank Council  to reduce the refinancing rate will be presented today at 14:00 at a  press conference by the Chairman of the Central Bank Martyn Galstyan.

The previous reductions in the refinancing rate in 2024 took place on  January 30 - by 0.5 percentage points from 9.25% to 8.75%, on March  12 - by 0.25 percentage points. from 8.75% to 8.5%, on April 30 -  again by 0.25 p.p. from 8.5% to 8.25%, on June 11 - again by 0.25  p.p. from 8.25% to 8%, on July 30 - again by 0.25 p.p. from 8% to  7.75%, on September 10 - again by 0.25 p.p. from 7.75% to 7.5%, and  on October 29 - again by 0.25 p.p. from 7.5% to 7.25%. In accordance  with this, the rates on lombard repos from January to October were  reduced to 10.75% to 8.75%, and on deposits attracted from banks -  from 7.75% to 5.75%.

Before this, in 2023, there were five reductions in the refinancing  rate - from the historical maximum of 10.75% to 9.25% in December.  The Central Bank began to reduce the refinancing rate on June 13,  2023, first by 0.25 percentage points, then on August 1 - by the same  amount, then on September 12 the decrease was more noticeable - by  0.5 percentage points, after which on October 31 the rate was reduced  by 0.25 percentage points and by the same amount on December 12.  Before this, the rate had been increasing for 2 years, reaching a  historical maximum of 10.75% at the end of 2022 and maintaining this  level until June 13, 2023, when the first reduction took place.

The refinancing rate was raised to 10.75% by the Central Bank on  December 13, 2022, and this turned out to be a new historical maximum  after 10.5% in 2015. The previous five increases took place in 2022  in February - from 7.75% to 8%, in March - to 9.25%, in August - to  9.5%, in September - to 10% and in November - to 10.5%. And from 2021  to and including December 13, 2022, there were twelve increases in  the refinancing rate - a total of from 5.25% to 10.75%. Let us recall  that in previous years, the historical maximum of the refinancing  rate was recorded in 2015 - 10.5%, in particular on February 10,  having been increased by 1 percentage point - from 9.5% to 10.5%.

In 2021, the Central Bank also raised the refinancing rate six times:  in February (by 0.25 p.p. to 5.5%), in May (by 0.5 p.p. to 6%), June  (by 0.5 p.p. to 6.5%), in August (by 0.5 p.p. to 7%), in September  (by 0.25 p.p. to 7.25%) and in December (by 0.5 p.p. to 7.75%), in  accordance with which, during these periods, the rates on Lombard  repos were increased by the same amount - from the initial 6.75% to  9.25% in December, and on deposits attracted from banks - from the  initial 3.75% to 6.25% in December. And in 2020, the Central Bank  revised the refinancing rate four times downwards and once upwards.  In particular, after the refinancing rate was reduced from 5.5% to  4.25% (March, April, June, September 2020), it was increased to 5.25%  in December. The rates on Lombard repos and on deposits attracted  from banks underwent a corresponding change - to 6.75% and 3.75% in  December.