Armenia maintains rate but still committed to tightening

      Armenia's central bank maintained its benchmark refinancing rate at 6.0 percent but said its board remains committed to a gradual neutralization of the current monetary stimulus as inflation is expected to rise slightly over the next 12 months but still remain within its target range.
      The Central Bank of Armenia (CBA) has kept its rate steady since February 2017 after cutting it 12 times by a total of 450 basis points from August 2015.
      Since November last year, the CBA's board has said it wants to gradually neutralize its current monetary stimulus, which is helping boost domestic demand and lending.
      But inflation is only slowly rising and inflation expectations have eased since the start of the year, the CBA said, adding that it still expects weak inflationary effects from the external sector.
      Armenia's inflation rate rose to 3.3 percent in February from 2.7 percent in January and deflation of 0.2 percent in February last year.
      The central bank targets inflation at a midpoint of 4.0 percent, plus/minus 1.5 percentage points.
      Economic activity in the first quarter of this year slightly exceeded the central bank's expectations due to high growth in industry, construction and services, the bank said.
       In its fourth quarter inflation report, CBA forecast 2018 growth of 4.7 - 5.8 percent.
       In the fourth quarter of 2017, Armenia's Gross Domestic Product grew by an annual 11.2 percent, up from 4.6 percent in the third quarter, and the highest growth rate seen since the third quarter of 2008.

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