The Central Bank of Armenia has raised its key policy rate for the first time in more than three years. On September 15, the CBA Board increased the rate by 0.25 percentage points, taking it from 6.5% to 6.75%.
At the same time, the lombard repo rate was set at 8.25%, while the rate on funds attracted by the central bank from banks was set at 5.25%.
How the rate has moved since late 2022
The previous tightening cycle ended on December 13, 2022, when the central bank raised the rate by 0.25 percentage points to 10.75%. It then stayed unchanged at that level for several months.
The shift to monetary easing began on June 13, 2023, when the CBA cut the rate from 10.75% to 10.5%. The new rate took effect on June 14. In August of the same year, the rate was reduced again, to 10.25%.
In the following months, the regulator continued to ease monetary conditions gradually, occasionally leaving the rate unchanged between cuts. By December 2025, the rate had fallen to 6.5%, where it remained through subsequent meetings until September 2026.
That means the policy rate dropped by 4.25 percentage points from 10.75% in December 2022 to 6.5% in December 2025, before the September move lifted it back to 6.75%.
Why the central bank decided to raise it
The move comes amid persistent inflationary pressure. In August 2026, Armenia’s 12-month inflation stood at 4.4%, while core inflation was 4.8%. The CBA’s inflation target is 3% (+1%).
CBA Governor Martin Galstyan said the Board took several factors into account in choosing a higher rate path. The first was strong domestic demand. The regulator pointed to continued high economic activity, as well as trends in imports of final consumer goods and in retail trade.
The second factor was stronger external demand. The central bank noted a rise in visits to Armenia, which could add pressure to wages and service prices in the relevant sectors.
The third was the risk of firmer inflation expectations and external price pressure. The regulator is taking into account geopolitical risks, developments in global commodity and energy markets, and the possibility of new supply shocks. Together with domestic demand, those factors could create more persistent inflation pressure.
At the same time, the CBA has not said this automatically marks the start of a prolonged hiking cycle. The Board is also considering alternative scenarios in which a slowdown in the global economy and other factors could instead create disinflationary pressure and imply a lower rate path.
What the September increase means
The September 15 increase marks a change in the direction of the CBA’s most recent decisions after a long period of cuts followed by a hold at 6.5%. But on its own, it does not automatically mean a lengthy tightening cycle has begun.
The central bank says future decisions will depend on how macroeconomic scenarios evolve. Its task remains to ensure price stability and bring inflation back to target over the medium term.
The move also should not be read as meaning commercial bank lending or deposit rates will rise immediately and in direct proportion. Monetary policy affects financial conditions through a transmission mechanism, and the pace and scale of changes in bank rates may differ.
