16.12.202509:08:54UTC+00Armenia Lowers Key Rate to 6.5%

The Central Bank of Armenia lowered its benchmark interest rate by 25 basis points to 6.5% during its December 2025 meeting. This adjustment signifies the second and final rate reduction for the year, thus bringing borrowing costs to their lowest since July 2021. In tandem with this decision, the policymakers also adjusted the deposit and lending rates, setting them at 5% and 8%, respectively. This move responded to a slowdown in headline inflation, which dropped to 3.1% in November, aligning closely with the targeted 3%, while core inflation increased to 3.8%. The inflationary pressures recently observed are considered supply-induced but neutral in demand impact. Although economic activity remains robust, there is ongoing uncertainty regarding domestic demand and the slower growth rates in major trading partners. The board noted potential bi-directional risks, including global inflation, fiscal pressures, and diminished external and domestic demand, as well as adjustments in the real estate market. Overall, the policymakers indicated a gradual approach to easing monetary policy, with market expectations placing the policy rate at around 6.25% over the coming year, affirming their steadfast commitment to maintaining price stability at 3%.