Tuesday, December 22, 2015

Armenia cuts rate 100 bps and sees further easing

    Armenia's central bank cut its refinancing rate by a further 100 basis points to 8.75 percent, saying its believes that it has now largely overcome the inflationary risks from the previous year and expects inflation to remain low in coming months so it will further ease monetary conditions in the absence of any external or internal risks.
    The Central Bank of Armenia (CBA) has now cut its rate by 175 basis points since August for a net increase this year of 25 points.
    Following a plunge the exchange rate of the dram in late 2014 in response to a fall in Russia's ruble - Armenia's largest trading partner - the central bank hiked rates three times by a total of 375 basis points beginning last December.
    This helped stabilize the dram which fell by some 16 percent from November 1 last year through Dec. 17. Today the dram was trading at 479.5 to the dollar to be down less than 1 percent this year.
    In November Armenia's inflation rate fell further to 1.2 percent as it continued to decelerate from a 2015-high of 7.75 percent in April. The central bank said inflation had continued to fall from low levels of agricultural prices and some imported goods.
    With domestic demand expect to remain at a low level, even with stimulating fiscal policy, the central bank expects low inflation to help lower inflationary expectations so the low inflation environment will continue.




Post a Comment