Its governing board set the refinancing rate at 10.5 percent, up by 0.5 percentage points.
“In September 2022, 12-month inflation increased and reached 9.9 percent,” read a statement released by the bank.
Despite the bank’s repeated rate hikes, consumer prices rose steadily in the first half of this year, translating into an annual inflation rate of 10.3 percent in June. It eased to 9.3 percent in July thanks to a seasonal drop in the cost of fruits and vegetables, according to Armenian government data.
The Central Bank statement said that robust economic growth in the country is adding to external inflationary pressures on the Armenian economy. The economy, it said, has in turned been boosted by an increased number of “visitors” as well as a surge in cash remittances from Russia, which followed the outbreak of the war in Ukraine.
The Armenian dram has strengthened against the U.S. dollar by almost 22 percent since the end of February, prompting growing concerns from Armenia’s export-oriented manufacturers. Economy Minister Vahan Kerobian publicly echoed those concerns in July.
The Central Bank governor, Martin Galstian, made clear in June that the bank will not cut interest rates or intervene in the domestic currency market to slash the dram’s value. The Armenian currency has strengthened further since then.
The bank insisted on Tuesday that the stronger dram will also help to “gradually” rein in inflation in addition to the higher cost of borrowing.