The Central Bank of Armenia raised its refinancing, or policy, rate by 0.25 percentage points to 6.75% at its September 15 meeting. The regulator said the decision is aimed at containing inflationary pressures that have remained above target in the third quarter of 2026.
According to the central bank, annual inflation in Armenia stood at 4.4% in August. That is above the bank’s 3% target, which has an allowable fluctuation band of ±1.0 percentage point, or 2-4%. The regulator says deviations beyond that range are a warning sign that may require a policy response.
The refinancing rate is the interest rate at which the central bank lends to commercial banks. In practice, a higher policy rate tends to filter through to the broader market over time by making borrowing more expensive for households and businesses, cooling demand and helping slow inflation.
Central Bank Governor Martin Galstyan told reporters that risks in the external environment have become more tangible. He said the prolonged nature of regional conflicts, along with some widening of their scope, is increasing the risk of weaker global demand while inflationary pressures rise at the same time.
The central bank pointed in particular to growing concerns over fiscal sustainability in the United States, deepening structural problems in the Eurozone and Russia, and the possibility of higher energy prices amid rising tensions in the Middle East.
On domestic factors, the regulator said economic growth in Armenia accelerated to 6.7% in the second quarter of 2026. Construction and services continued to make the biggest contribution to growth. At the same time, a sharp increase in visits to Armenia has, in the bank’s view, created market risks that could push up wages in those sectors and add to inflation.
The central bank also highlighted offsetting risks. These include excess supply in the domestic market due to restrictions on exports to Russia, as well as weaker consumer and investment confidence.
This is the first change in the policy rate since December 2025, when the Central Bank of Armenia cut it from 6.75% to 6.5%. Over the past five years, the refinancing rate reached its highest level in 2022 at 10.25%, before being lowered in several stages as inflation gradually eased.
