Armenia Raises Policy Rate to 6.75%

The Central Bank of Armenia raised its policy rate by 25 basis points to 6.75% at its September 2026 meeting, citing persistent inflationary pressures and strong domestic demand. The deposit rate was increased to 5.25%, while the lending rate rose to 8.25%. Annual inflation eased to 4.4% in August from 4.5% in July, marking the lowest level since May, while core inflation edged up to 4.8% from a year earlier. Economic growth accelerated 6.7% year-on-year in the second quarter of 2026, from a 5.2% growth in the previous quarter. Against this backdrop, the Board placed greater emphasis on risks from stronger domestic and external demand and rising inflation expectations, which warranted a higher policy rate path. The rate increase came as the Bank continued to balance persistent inflationary pressures against strong domestic economic activity.

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.