Armenia's Central Bank tries to curb inflation by raising the rate

The Central Bank of Armenia has raised the key rate by 0.25%, to 7%.

This was stated in a message following the results of the current meeting of the Central Bank's board.

The accompanying rates will rise by the same amount — on loans attracted by banks from the Central Bank (Lombard repo) and, conversely, on the Central Bank's borrowings from banks. In the first case, the rate will rise to 8.5%, in the second — to 5.5%.

It was noted earlier that the active growth in consumption of goods and services, including on account of tourists and relocants, as well as the increase in mortgage lending volumes, create risks of overheating of the economy.

Raising the key rate is one of the instruments with which the Central Bank can restrain excessive growth in demand and inflationary pressure.

A change in the Central Bank's rate is gradually reflected in lending and savings conditions. Borrowing for the population and businesses may become more expensive, while the yield on bank deposits may rise. As a result, citizens have more incentives to set money aside rather than direct it toward current consumption.

Source: Sputnik Armenia