Armenia’s central bank raised its key refinancing rate by 100 basis points to 5.25% on Tuesday, marking a shift in monetary policy after a gradual easing since March, reports Reuters.

Stung by COVID-19 health restrictions and reeling from a six-week war with Azerbaijan, Armenia’s economy is expected to contract by 7.9% this year, according to the finance ministry.

But central bank chief Martin Galstyan said the projected quickening of inflation meant a rate hike was necessary.