Armenia Leaves Key Rate Unchanged

The Central Bank of Armenia kept its benchmark interest rate unchanged at 6.5% during its August 2026 policy meeting, maintaining a cautious stance as inflation remained above target. The deposit rate was held at 5%, while the lending rate remained at 8%, preserving the existing monetary policy corridor. The decision followed June inflation of 5.1% and core inflation of 4.9%, highlighting strong domestic activity driven by construction and services, alongside improving external demand, but highlighted risks from global growth weakness, elevated energy prices, and persistent uncertainty. While demand pressures and supply-side factors continue to support inflation, stabilizing wage growth and expectations, weaker export conditions, and potential disinflation risks remain key considerations. Markets broadly expect the policy rate to stay at 6.5% over the medium term as the Bank balances upside inflation risks with downside growth risks and works toward its 3% inflation target.

The Central Bank of Armenia kept its benchmark interest rate unchanged at 6.5% during its June 2026 policy meeting, maintaining the stance from its previous meeting. The bank also kept its deposit rate at 5.0% and lending rate at 8.0%. The decision came as annual inflation eased to 4.2% in May from 5.3% in April. However, core inflation, edged higher to 5.1%, suggesting that underlying inflationary pressures remain elevated. The central bank's move reflects a balance between declining headline inflation and persistent core price growth. Meanwhile, Armenia’s GDP growth expanded by 4% year-on-year in the first quarter of 2026, slowing sharply from a 9.8% growth in the previous quarter, marking the slowest growth since fourth quarter of 2024.

The Central Bank of Armenia held its benchmark interest rate steady at 6.5% during its May 2026 meeting, and also maintained the deposit and lending rates at 5% and 8%, respectively. Annual inflation rose to a three-year high of 4.5% from 4.3% in February, while core inflation remained unchanged at 4.7%. Beyond inflation, the broader economic backdrop remains supportive. Economic activity stayed resilient in the first quarter of 2026, underpinned by strong expansion in construction and services. Growth in the services sector, in particular, reflects a shift toward segments fueled by rising domestic demand. However, uncertainty about the current demand conditions is rising, as geopolitical tensions and volatile energy prices increase inflation risks and weigh on the outlook. The Board reaffirmed its decision to keep the policy rate unchanged, while emphasizing its readiness to adjust policy as needed to safeguard its medium-term objective of maintaining inflation at 3%.