Armenia's central bank kept its benchmark refinancing rate steady at 8.5 percent, repeating that it expects inflation to decline in coming months and this would allow it loosen monetary conditions.
The Central Bank of Armenia (CBA), which raised its rate last month by 50 basis points, said it does not expect any significant inflationary pressures from the external environment and the domestic economy is characterized by weakening demand due to lower private consumption and investment.
In addition, a restrictive fiscal policy is affecting demand, the CBA said.
Last month the CBA also said it expected to be able to loosen its policy as inflation falls and that it expects inflation to ease in the short-term and hit its target range.
In August Armenia's inflation rate rose by 0.3 percent from July for an annual rate of 9.3 percent, up from 8.52 percent. The central bank targets inflation of 4.0 percent within a 1.5 percentage point band.
Armenia's Gross Domestic Product expanded by an annual 0.6 percent in the second quarter, down from 7.5 percent in the first quarter.