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The Central Bank of Armenia (CBA) has cut its key interest rate for the eighth time this year, citing continuing consumer price deflation and slowing economic growth in the country.

Meeting late on Tuesday, the CBA’s governing board cut the refinancing rate by 0.25 percentage points to 6.25 percent, the lowest level in more than two years.

In a statement, the bank said although inflation reached 1 percent in November, the national consumer price index was still down by 0.6 percent in average annual terms. It predicted that “the deflationary environment will persist in the coming months.”

The statement pointed in that regard to recent decreases in the domestic prices of natural gas and electricity which will take effect early next year. It also said that external inflationary pressures on the Armenian economy are unlikely in the short run because of sluggish global growth.

The CBA further argued that economic growth in Armenia has slowed this year despite what it called a “recovery of internal consumer demand.”

Finance Minister Vartan Aramian said last week that the Armenian government expects Gross Domestic Product to increase by only 0.5 percent in real terms in 2016. The government had previously forecast a growth rate of 2.2 percent.

Aramian attributed the slower-than-expected growth to a downward revision of Armenian agricultural output calculated by the National Statistical Service and other government agencies.

The minimum cost of borrowing stood at 6.75 percent when the Armenian dram began weakening against the U.S. dollar in October 2014 amid falling cash remittances from Armenian migrant workers in Russia. The CBA raised it to 10.5 percent and tightened minimum reserve requirements for commercial banks, stabilizing the national currency’s exchange rate by the beginning of 2015. The bank began gradually easing its monetary policy more than a year ago.

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