Armenia's central cut its benchmark refinancing rate by 50 basis points to 8.0 percent, reversing a rate rise in August, saying the easier policy reflected the inflationary environment.
The Central Bank of Armenia (CBA) raised its rate by 50 basis points in August due to accelerating inflation but then said in September that it expected inflation to start to decline in coming months and this would allow the bank to loosen monetary conditions.
Armenia's headline inflation rate fell to 7.1 percent in October from 8.19 percent in September and 9.245 percent in August, a high for this year. The CBA targets inflation of 4.0 percent within a 1.5 percentage point band.
"The board (of the CBA) believes that 12-month inflation will continue to decline in coming months and inflation expectations are anchored," the bank said, adding that it expects inflation to remain within the tolerance band in 2014.
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, but growth should improve due to an expansionary fiscal policy in the fourth quarter and next year, the CBA said.