Armenia raises refinancing rate 25 basis points to 6.75% as core inflation rises

The Central Bank of Armenia raised its refinancing rate by 25 basis points to 6.75% on 15 September. It also set the Lombard facility rate at 8.25% and the deposit facility rate at 5.25%. The decision reversed the direction of the bank’s previous rate change.

The central bank reported annual inflation of 4.4% in August and core inflation of 4.8%. Both measures stood above its 3% medium-term target.

INFLATION PRESSURES DROVE THE TIGHTENING

The board cited excess demand in the domestic economy and expanding external demand, reflected in a significant increase in visits to Armenia, which it said posed material upside risks to wage growth and services inflation; it also weighed the risk of slowing global growth. The board said it emphasised the need to manage the implications of scenarios involving stronger domestic demand, further expansion in external demand and rising inflation expectations.

The decision came after the refinancing rate had been reduced to 6.50% in December 2025. The increase returned the rate to the 6.75% level at which it had been held through most of 2025.

FUTURE MOVES DEPEND ON INFLATION

The central bank said the recent acceleration in core inflation had become more broad-based, likely pointing to strong demand conditions. The board said it would continue to monitor the scenarios for economic developments and stood ready to act to ensure the 3% inflation target and price stability in the medium term.

Financial market participants had generally expected the central bank to keep the rate unchanged over the next year, according to the statement.