"We Have Reached a Very Important Critical Point": Central Bank President

The Central Bank (CB) will announce its decision regarding the refinancing rate tomorrow, on June 13. This was stated by the CB President Martin Galstyan during an extraordinary session of the National Assembly's Standing Committee on Financial-Credit and Budgetary Affairs.

“Today is a day of silence for us so as not to mislead market participants and the public. Our decision will be revealed tomorrow. We have reached a very important critical point; after two years of high inflation, we now have inflation that is below the target, primarily due to the decline in the prices of imported food products,” stated the CB President.

According to him, especially in the service sector, where there has been no inflation for decades, we now have the opposite picture. The reason, according to Martin Galstyan, is the increase in demand.

“As you know, the main goal of the CB is to manage demand. In this case, we see that the annual inflation for May was 1.3%. Alongside such encouraging figures, we notice that there is excess demand in the economy,” he added.

The CB President believes that our economic growth and demand continue to be higher than our potential. It is worth noting that according to the Eurasian Development Bank's forecast, inflation is expected to be around 2.5% by the end of 2023. For the remaining periods of the year, the price increase might be slightly lower than the Central Bank's target level.

The main factors restraining price growth are the strengthening of the Armenian dram's exchange rate and the decrease in global prices for raw materials. By the end of 2024, inflation in Armenia is projected to be 3.3%.

Considering the stable slowdown of inflation and the gradual stabilization of consumer demand, the EDB did not rule out a potential decrease in Armenia's CB refinancing rate in June. The refinancing rate could drop to as low as 9% by the end of the current year.