YEREVAN. - The Central Bank of Armenia (CBA) wants to “crash” the expectations of high inflation in the republic. Arthur Javadyan, Chairman of CBA, told the aforementioned to Armenian News – NEWS.am correspondent.
Responding to the question on why the expectations of inflation have become so vital a year after the currency fluctuations in November-December 2015, Javadyan said that now the CBA doesn’t assess those expectations so negatively.
According to the CBA expectations, mentioned in the monetary policy program for the 4th quarter of 2015, during the first months of 2016 the inflation will remain at a low level, and will then come closer to the target indicator (4 percent). But the October 2 statement on refinancing rate said that the growth of fluctuations on the world financial and currency markets gives rise to rather high inflation expectations in the Armenian economy, which didn’t allow forming lower inflation climate.
In the December 22 statement on refinancing rate, the CBA noted that the low inflation has already contributed to lowering inflation expectations.
“Of course, there are certain tendencies, but there are also risks, which we mention in our documents. Due to the situation on world trade markets and deflation within the country, we have loosened the monetary conditions. But we have also fixed the possible risks in case of unprecedented developments. There definitely are also negative expectations in the public, but, among other things, they are related to the seasonality, since the inflation traditionally grows in September and by the end of the year. But we would like to see these expectations change from low inflation climate, ” Javadyan said.
During the period of currency fluctuations in late 2014 and early 2015, the rate of lombard repo became the orientation rate on the market for a short time instead of the refinancing rate. “But very soon we began to lower this rate proportional to lowering of risks,” Javadyan said.
At the session held on 22 December 2015, the CBA Council lowered the refinancing rate by 1 percentage point, up to 8.75 percent. And on November 10, the CBA lowered the rate of obligatory reservation for means included in stock exchanges. If the emission takes place at international stock markets, the rate is lowered from 20 percent to zero. And if the allocation takes place in an Armenian stock market or even unlisted companies for longer periods, 5 percent rate is applied.
