Money & Macro Talks Armenia’s Radical New Monetary Policy Approach | Governor Martin Galstyan & Armen Nurbekyan
Apr 16, 2024
Martin Galstyan, Governor of the Central Bank of Armenia, and Armen Nurbekyan, Deputy Governor, dive into Armenia's unique monetary policy. They explain how Armenia’s turbulent history shaped a systematic and scenario-based approach to monetary policy. The governors discuss the challenges they face with geopolitical tensions from Europe to Russia and the impact on their economy. They emphasize the importance of transparency and communication in managing inflation and navigating economic uncertainty, showcasing how innovative strategies can bolster financial stability.
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Shift to Inflation Targeting
- Armenia's central bank evolved from monetary targeting to inflation targeting in 2006 to build credibility and control inflation.
- This shift required convincing economic agents that the bank would deliver on its inflation promises consistently.
Systematic Monetary Policy Questions
- A systematic framework answers: Where is the economy now, what drives it, and what should policy do?
- Most central banks fail to communicate these key questions clearly in their policies.
Inflation Narratives Affect Policy
- Inflation narratives shape policy: demand-driven inflation calls for interest rate hikes, supply-driven does not.
- Misjudging narratives can delay appropriate monetary responses, as seen with the US Federal Reserve.