6.75%: Armenia's Central Bank Raises Key Interest Rate for the First Time Since December 2022

6.75%: That is the level at which Armenia’s key interest rate has stood since September 15. The Central Bank’s Board raised it by 0.25 percentage points. This is the first increase since December 2022. The rate had been at 6.5% since December 2025.

At the same time, the Council set the Lombard repo rate at 8.25%. The rate for bank deposits with the Central Bank is now 5.25%. The cycle of rate cuts had begun in August 2023, when the rate stood at 10.75%.

Four to four

The decision was close. “The Central Bank Council meeting was quite difficult, as the votes were split four to four. Four council members believed the interest rate was appropriate as it was. Four council members, including myself, were in favor of a rate hike,” Central Bank Governor Martin Galstyan told reporters in Yerevan on September 15.

Galstyan cites domestic demand as the trigger. In June and July, supply-side factors were still driving prices. Now, service prices are rising again. The central bank points to a new wave of migration and an increase in visitors to the country. Both are pushing up wages and prices in the affected sectors.

The price data supports this. According to the Armenian Statistical Committee, consumer prices in August were 4.4% higher than a year earlier. Compared to July, they rose by 0.2%. Food and non-alcoholic beverages cost 6.4% more, while alcohol and tobacco rose by 7.5%. Education became 8.3% more expensive, and non-food items rose by 2.4%.

The World Bank attributes 57% of inflation to food. The rate of increase in food prices slowed from 8.6% in June to 6.4% in August. This is stated in the World Bank’s September “Monthly Economic Update” for Armenia.

Reserves at Record Levels

Gross reserves reached $6.5 billion in August. This is a record high and covers 4.3 months of imports. The World Bank attributes the increase to high remittances and capital inflows. The risk premium on Armenian Eurobonds fell to around 170 basis points, Galstyan said on September 15.

The market had expected otherwise. According to the central bank, financial market participants anticipated, on average, that the rate would remain unchanged over the coming year. In the medium term, they expected it to be 6.25%. “Today, the Central Bank’s Council decided on a more restrictive stance,” Galstyan said.

He cited one condition for a reversal: growth would have to slow significantly. If the global economy weakens or export restrictions to Russia have a stronger impact, the Central Bank would cut rates again.

For German exporters, this move shifts the financial burden to their customers. Loans in drams become more expensive, and investments are put on hold. It becomes more difficult to finance machinery, equipment, and commercial vehicles. Supplier credit and leasing are gaining importance. A strong dram, on the other hand, supports imports: On September 16, the Central Bank quoted 420.08 drams per euro. Construction and services continue to grow, and demand for equipment remains strong. Anyone calculating quotes now should factor in higher financing costs on the other side and expect longer decision-making processes.

Sources: Central Bank of Armenia (EN/HY), Statistical Committee of Armenia (EN/HY), World Bank – Monthly Economic Update September 2026 (EN), ARKA (EN/RU).

SK, Frankfurt