YEREVAN, June 28 (Reuters) - Armenia's central bank said on Tuesday it had decided to cut its refinancing rate to 7.5 percent from 7.75 percent.

Annual deflation in the South Caucasus country was at 2.1 percent in May compared to 1.9 percent deflation in April, according to central bank data. Monthly deflation in May was 0.7 percent compared to 0.3 percent deflation in April.

The government forecasts annual inflation in a 2.5-5.5 percent range in 2016, the same as last year's target.

(Reporting by Hasmik Mkrtchyan; Writing by Margarita Antidze; Editing by Vladimir Soldatkin)