Armenia's central bank maintained its benchmark refinancing rate at 10.50 percent as inflation eased in April and is expected to stabilize around the bank's target in about 12 months as future increases in electricity prices will neutralize some of the prevailing deflationary forces.
The Central Bank of Armenia (CBA), which has raised its rate by 375 basis points since December following a rapid depreciation of the dram currency's exchange rate, said international markets were still characterized by a deflationary environment and slow economic growth.
The dram has been dragged down by Russia's economic crises, Armenia's main trading partner, with remittances sharply down.
The dram fell sharply from early November to mid-December 2014 but since then it has stabilized and the central bank has said it intends to purchase U.S. dollars to prevent a sharp appreciation of the dram.
Today the dram was quoted at 480.5 to the U.S. dollar, only slightly down from 474.9 at the start of the year but sharply below its rate of 411 on Nov. 1. 2014.
Armenia's inflation rate was 4.8 percent in April, the CBA said, within the central bank's target of 4.0 percent, plus/minus 1.5 percentage points, down from 5.8 percent in March. Other data showed April inflation of 1.9 percent.
In its first quarter monetary policy report, the CBA estimated economic growth this year in the range of 0.4 to 2.0 percent due to a resumption of trade.