YEREVAN. – At the meeting held on 11 August 2015, Council of Armenia’s Central Bank decided to lower the refinancing rate by 2.25 points, namely up to 10.25%, Armenia’s Central Bank press-service reports.

In July 2015, 2.2% deflation in comparison with 0,9% deflation for the same period in 2014 was recorded. Consequently, 12-month inflation lowered, reaching 4,2% by the end of the month.

World economy growth rate proved more slow than expected, this maintaining the tendency to deflation on world commodity market. On the basis of this, and also expected weak growth of global demand  in the coming months, as well as considering the surplus of supply in separate markets, Central Bank council continues to consider the external impact as non-inflationary.   

According to the Council assessment, the economic development rates exceeded the expectations in the second quarter: in the period from January to June, as compared to the same period in 2014, they constituted 4,2% mainly due to the excess of predicted agricultural and specifically industrial growth.  Despite high rates of agricultural products and expectations on their preservation, and as a result of positive development, lower level of agricultural product prices will be formed.

Low non-inflationary background will be partly neutralized by tax and budgetary policy, which is a little more stimulating than expected. At the same time, the earlier expected inflationary impact from electricity tariff rise from August 1 is not considered now. In light of other processes, Central Bank Council expected that in the second half of 2015, the 12-month inflation will lower and fluctuate in the region of the lower margin allowed. Thus, the Central Bank finds it appropriate to weaken monetary and credit conditions.

Nevertheless, inflationary risks and the possibility of corresponding corrections by Central Bank will be preserved in both the external sector and domestic economy.