Tuesday, December 14, 2021

Armenia raises rate 7th time to curb rising inflation

     Armenia's central bank raised its key interest rate for the 7th time, noting the significant increase in external inflation and inflation expectations, with the tightening expected to lead to a gradual decrease in inflation toward the bank's 4.0 percent target in the medium term.
     The board of the Central Bank of Armenia (CBA) raised its refinancing rate by another 50 basis points to 7.75 percent and has now raised it 3.50 percentage points since December 2020 when it began tightening its policy stance in response to rising inflationary pressure.
     This year CBA has raised its key rate 6 times and by a total of 2.50 percentage points following rate hikes in February, May, June, August, September and today.
      Last month the bank's board left the rate steady, saying the risks of inflation deviating from its forecast were balanced.
      Today, however, the central bank said there was a risk of inflation deviating upward from its projected trend due to the uncertain economic outlook, and in the event of this risk emerging "it is ready to respond adequately to ensure it reaches its goal of price stability."
     Inflation in the Central Asian country - sandwiched between Turkey, Iran, Azerbaijan and Georgia - rose to 9.6 percent in November from 9.1 percent in October while gross domestic product grew 2.7 percent year-on-year in the third quarter of this year, down from 13.3 percent in the second quarter.
     Last month the International Monetary Fund (IMF) forecast growth of 5.5 percent this year and 5.25 percent in 2022 while inflation is projected to ease.



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