Tuesday, September 27, 2016

Armenia cuts rate 50 bps, will consider further easing

    Armenia's central bank lowered its benchmark refinancing rate by a further 50 basis points to 6.75 percent and said its board would consider further easing of monetary conditions in light of continuing low inflation, a significant fall in inflation expectations and low domestic demand.
    But the Central Bank of Armenia (CBA) - which has cut its rate by 375 basis points since embarking on an easing cycle in August 2015, including cuts of 200 points this year alone - added that it doesn't see any risks of achieving its inflation target in the medium term despite the prevalence of short-term deflationary risks.
    Armenia's inflation rate fell to minus 1.9 percent in August from minus 1.3 percent in July and the CBA said it expects inflation to remain low in September.
    The CBA targets inflation in the medium term of 4.0 percent, plus/minus 1.5 points.
    Data for economic activity in the third quarter show "worsening prospects of economic growth" - following "high" activity in the first half - and the central bank has revised downward expectations for domestic demand.
    Armenia's dram currency has been firming since mid-February and was trading at 473.3 to the U.S. dollar today, up 3 percent since the start of this year.



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