Armenia Holds Key Rate Steady

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%.

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.