Ovak Ovakimyan, director of Freedom Broker Armenia, says the Central Bank of Armenia’s recent rate increase is unlikely to materially change market sentiment or investment activity in the local market. He argued that the tightening in monetary conditions is moderate and that the regulator’s move had already been at least partly priced in by market participants.
On September 15, the Board of the Central Bank of Armenia raised the monetary policy rate by 0.25 percentage points to 6.75%. In comments to ARKA news agency, Ovakimyan described the decision as broadly expected.
He noted that such a move had already looked likely because consumer inflation in the country has remained above the upper edge of the central bank’s 3% target band (±1 percentage point) since February. At the same time, regulator officials have indicated that the persistence of core inflation is a particular concern.
According to the Freedom Broker Armenia chief, another important factor is the growing risk of imported inflation pressures. He linked this to oil prices surging above $100/barrel and to logistics disruptions caused by the recent geopolitical escalation in the Middle East. In particular, he pointed to continuing shipping restrictions through the Strait of Hormuz amid the US-Iran conflict, as well as transport problems through the Bab-el-Mandeb Strait, which links the Red Sea and the Gulf of Aden and is one of the world’s key maritime oil transport routes.
Ovakimyan said Armenia’s government bond market could face some limited price pressure. However, he expects the impact on prices and yields of dram-denominated corporate bonds to be minor, citing weak market liquidity and already relatively wide spreads.
He added that if the monetary tightening cycle continues while pro-inflationary factors persist, the market response could become more pronounced. Even then, low liquidity and limited market efficiency may delay that response and result in only partial repricing of some bond issues.
