Central Bank of Armenia Lowers Refinancing Rate

Following its meeting on December 16, the Central Bank of Armenia has reduced the refinancing rate by 0.25 percentage points to 6.5%, the first such decrease since February 2025.

Simultaneously, the regulator adjusted the parameters of the following monetary instruments:

1. The interest rate on collateralized funding has been set at 8.0%.
2. The rate on funds attracted from banks is 5.0%.

What the Rate Cut Means for the Economy and Citizens

The refinancing rate is the baseline benchmark for the cost of money in the economy. The interest rates on bank loans and deposits are directly dependent on it.

A reduction in the key rate may signal:

1. A gradual decrease in the cost of credit for the population and businesses.
2. Lower rates on new mortgage and consumer loans.
3. Softer financing conditions for companies.
4. A possible slowdown in the growth of deposit rates in the future.

However, the effect of the CBA's decision typically takes several months to materialize, as banks revise their tariffs over time.

Why This Is Important

The decision to cut the rate for the first time in nearly a year signals that the regulator sees conditions suitable for easing monetary policy. Typically, such steps are taken amid inflation stabilization and expectations of more moderate price growth.

For borrowers, this could be a favorable time to plan for loans, while for depositors, it is a reason to closely monitor deposit terms.

Follow changes in credit and deposit rates for Armenian banks on AFM – we update the information immediately after the Central Bank's decisions.