CBA RAISES ANNUAL REFINANCING RATE TO 5.25%

ARKA
Nov 5, 2007

YEREVAN, November 5. /ARKA/. The Board of the Central Bank of Armenia
(CBA) made a decision on November 2 to raise the refinancing rate by
0.25pct to 5.25% annual percentage rate. The new refinancing policy
(on November 2 and earlier on October 2) aims at balancing the
inflationary pressure, the CBA press service reports.

According to the CBA Board members, despite revaluation of the Armenian
Dram (AMD), the recent unprecedented increase of world prices of oil,
crops, vegetable oil and ghee caused high inflationary pressure on
the Armenian market.

However, members of CBA Board believe it is impossible to balance the
external inflationary pressure by monetary instruments. At the same
time, they are apt to think that repeated influence of such external
factors resulting in high rates of consumption and extensive influence
of expected budget expenditures will cause inflationary pressure in
the future.

3.1% inflation was recorded in Armenia in October 2007 (against
September).

As a result, the annual inflation (in October 2007 as compared to
October 2006) totaled 5.7%, exceeding by 0.2pct the upper notch of
the target (4±1.5%).

According to the RA sate budget, 4% (±1.5%) inflation is planned by
late 2007

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