Monetary Policy Accountability
As an important part of our continuous commitment to enhancing and strengthening the Central Bank’s transparency and accountability in matters of monetary policy, the Central Bank of Armenia publishes the Monetary Policy Accountability Report on an annual basis. This report helps ensure that our policy decisions are clearly understood and effective. It also encourages us to continuously strive to improve the quality of our analysis, communications, and decisions. Together, these values constitute an important foundation of our commitment to achieving price stability, which we understand as a means to support the broader goal of improving the welfare of our nation.
The report is intended to describe the CBA’s approach to maintaining price stability over the prior year. It provides a concise overview of economic developments, followed by an exposition of each of the eight monetary policy decisions made in the preceding year. This includes a comprehensive discussion of the different scenarios policymakers considered when making their decision and their assessment of policy trade-offs in the context of our “least regrets” decision-making model. Building on our commitment to individual Board member accountability, the report considers how each Board member’s thinking around policy-relevant issues evolved over the year. Finally, given our commitment to ensuring the policy framework and decisions are accessible and easily understood for the public, the report responds to commonly asked questions about monetary policy in the prior year.
This report conforms to the requirements proscribed in the Law on the Central Bank of Armenia, which stipulates that the CBA prepare and publish a report in the first quarter of each year, outlining the implementation of monetary policy over at least the preceding twelve month period.
Monetary Policy Accountability Report
Section I presents a summary of global and domestic economic developments in Armenia. As in the Monetary Report, the focus of the summary is to elucidate the two ingredients essential for economic analysis: where was the economy, and what were the underlying forces driving the economy, in the context of key risks and uncertainties. It provides a meaningful and comprehensive economic context that enables the reader to best understand the logic of the decisions and the Board's thinking.
Section II presents an overview of the conduct of monetary policy in the prior year, focusing on how the CBA managed risks through a framework of “least regrets.” The section begins with an annual taxonomy covering the different types of scenarios that policymakers considered throughout the year, reflecting a summary of the universe of major issues the Board and Staff of the CBA, as well as external stakeholders, were concerned about. The section then proceeds to assess how the Board arrived at and communicated their policy rate decisions, what trade-offs they managed, and how Board members’ concerns regarding key risks, uncertainties, and trade-offs evolved over the year.
Section III presents the assessment of how financial markets reacted to policy rate decisions and communications.
Section IV provides comprehensive assessment on monetary policy outcomes.
Section V provides responses to common questions on the conduct of monetary policy in the preceding year, drawing upon frequent questions or comments raised by members of the media, academia, financial markets, and the general public over the course of the year. The purpose of this section is to better clarify the objectives, purpose, and conduct of monetary policy; address potential misconceptions; and explain important topics relevant to understanding monetary policy conduct.