The inflation targeting strategy of the Central Bank
of Armenia highlights the importance of communicating of the Bank to the
general public by publishing, inter alia, quarterly inflation reports.
The first section of the inflation report includes
the Monetary Policy Program that provides main directions of the monetary
policy in the forecast horizon as well as forecasts of inflation and other
macroeconomic indicators. These forecasts are based on the Bank’s assessment
of the current situation and future assumptions by the Bank, which also
include the impact of the Bank operations.
The second section includes status report on
implementation of the monetary policy program of the previous quarter, which
presents the results of monetary policy implementation and covers the actual
developments in the domestic economy.
Publishing of inflation forecast and assumptions
underlying it makes the monetary policy of the Bank more transparent,
understandable and predictable, which considerably increases the public
confidence in the Bank. The Bank believes that a clear and trusted monetary
policy positively affects the anchoring of inflation expectations and
maintaining financial stability in terms of cost reduction.
According to the rule of monetary policy, the policy
is aimed at minimizing the deviations between the 4% target and the
inflation forecasts. The path to inflation rate shaped as a result of
projected policy directions is published as a forecast probability
distribution chart for the 12-quarter time horizon.