Armenia’s inflation targeting framework has served the economy well. Notable  progress has been achieved since the adoption of the framework, including establishing price  stability as the primary objective of monetary policy and ensuring that the Central Bank of Armenia  (CBA) considers the implications of its policy decisions on output and financial stability. The  framework has been successful at anchoring inflation expectations and has bolstered the CBA’s  policy credibility. It has also contributed to the overall prudent economic policies in the country,  helping maintain macroeconomic stability.  However, Armenia’s economy is subject to frequent shocks that complicate monetary  policy. The nature, size, and propagation of these shocks is difficult to predict, making monetary  policy decisions very challenging, especially when the direction of impact is not clear, and as the  transmission mechanism of monetary policy is weak due to the lack of a well-established benchmark  yield curve, underdeveloped financial markets, and still high financial dollarization. The problem is  compounded by Armenia’s ongoing structural changes in the economy