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.