CBA CHAIRMAN: USE OF REFINANCING INTEREST RATE’S INSTRUMENT IN 2006 PRODUCED A RESULT

Noyan Tapan
Feb 05 2007

YEREVAN, FEBRUARY 5, NOYAN TAPAN. In the opinion of the CBA Chairman
Tigran Sargsian, in 2006 – the first year of CBA’s inflation
targeting policy, they succeeded in using the instrument of the
refinancing interets rate by its purpose. Presenting on February 5
the 2007 monetary and credit policy of the Central Bank of Armenia
(CBA), T. Sargsian said that the CBA’s refinancing interest rate has
already affected crediting of commercial banks and the interest rates
of deposits with these banks.

According to him, the CBA combines the setting of refinancing
interest rates with the use of interest rates of lombard credits and
deposits. In his words, in case of facing the problem of liquidity,
commercial banks may rely on the CBA by investing excessive money in
the CBA.

T. Sargsian said that CBA will continue increasing the efficiency of
the instrument of the refinancing interest rate because "the effect
of a short-term interest rate on a long-term one or on the amount of
credits is still small."

The CBA chairman said that in 2006, inflation made 5.2% in Armenia,
and it is forecast to make 4% in 2007 and 3% in 2008. The forecasts
allow a 1.5% deviation.