Central Bank of Armenia Holds Key Rate Steady

The Central Bank of Armenia held its benchmark interest rate steady at 6.5% during its March 2026 meeting, and also maintained the deposit and lending rates at 5% and 8%, respectively. Annual inflation rose to a nine-month high of 4.3% in February from 3.8% in January, while core inflation climbed further to 4.7% from 4.5%. Additionally, GDP growth accelerated sharply to 9.8% in the fourth quarter of 2025 from 6.2% in the previous quarter, driven primarily by the construction, services, and manufacturing sectors. However, uncertainty regarding current demand conditions and the outlook has increased significantly, particularly due to structural challenges to economic growth and risks linked to fiscal expansion. The Board said it will continue to closely monitor economic developments and is prepared to take appropriate measures to ensure price stability and achieve its 3% inflation target over the medium term.

The Central Bank of Armenia kept its benchmark interest rate unchanged at 6.5% during its February 2026 meeting. Policy makers also kept the deposit and lending rates steady at 5% and 8%, respectively. The decision reflected a balance between inflationary pressures and economic demand, as annual headline inflation rose to 3.3% in December from 3.1% in the prior month, remaining below the Central Bank’s 4% target, while core inflation stood at 4.3%. The board noted that domestic economic activity remained robust, supported by growth in construction and services as well as temporary factors in manufacturing, though medium-term risks persist. In view of these conditions, the board opted to maintain a steady policy stance to manage both inflationary pressures and factors that could dampen growth, while supporting stability around its 3% medium-term target.

The Central Bank of Armenia cut its benchmark interest rate by 25 bps to 6.5% at its December 2025 meeting, marking the second and final cut this year and bringing borrowing costs to their lowest level since July 2021. Policymakers also reduced deposit and lending rates to 5% and 8%, respectively. The decision came as headline inflation slowed to 3.1% in November, close to the 3% target, while core inflation rose to 3.8%, with recent pressures seen as supply-driven and demand-neutral. Economic activity remained strong, although uncertainty persisted over domestic demand and weaker growth in key trading partners. The board flagged two-sided risks, ranging from global inflation and fiscal pressures to softer external and domestic demand, including real estate adjustments. Overall, policymakers signaled a gradual easing path ahead, with markets pricing the policy rate near 6.25% over the next 12 months, while reaffirming their commitment to price stability at 3%.