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. Independent specialist analysis confirmed the rate increase and the renewed rise in inflation.
INFLATION PRESSURES DROVE THE TIGHTENING
Armenian policymakers said global conditions presented competing risks, including weaker demand and stronger inflationary pressure. The rate increase indicates that the bank placed greater weight on persistent price pressures when setting policy in September.
The decision came after the refinancing rate had been reduced to 6.50% in December 2025. Raising it to 6.75% therefore marked a partial reversal rather than a return to the substantially higher policy settings used earlier in the inflation cycle.
FUTURE MOVES DEPEND ON INFLATION
The spread between headline and core inflation will be important for judging whether price pressures are broadening. Policymakers will also assess demand, exchange-rate conditions and regional risks before deciding whether further tightening is needed.
The next concrete milestone is the central bank’s subsequent policy decision and updated inflation assessment. A sustained move back towards the 3% target could reduce the need for additional increases, while persistent core inflation would keep policy risks tilted towards restraint.