CENTRAL BANK COULD NOT COUNTERACT TO EXTERNAL SHOCK

Panorama.am
15:10 13/11/2007

12-month inflation reported 5.7% in October instead of 2.7% of
September this year exceeding the target indicator of 4±1,5%. This date
was released by the Armenian Central Bank. It must be mentioned that
the inflation totaled 3.1% only in October and it made 3% against
December of last year.

According to Central Bank press services, the rise in prices
was conditioned by external factors, particularly by higher
international prices on "bread products" and "natural oil and
butter." In June-October, the prices on these products went by 21%
and 31 % contributing to inflation by 3.1 and 1.3 percents. Such sharp
rise in international prices is viewed as external shock which the
monetary and credit regulation structures could not neutralize only
using monetary mechanisms.

The Central Bank assures that conditioned by external shocks,
exceeded risks of targeted inflation rates have happened throughout
the world. The chief bank reported that in the course of recent few
months the unexpected high prices on oil, wheat, butter and natural
oil, despite of evaluation of the Armenian dram, have created a high
inflation environment in the internal market. Under these conditions,
the Central Bank board has discussed possible scenarios of raising
the interest rates and restraining monitory and credit policies. As
a result, it was decided that the interest rate level for re-funding
must be raised by 0.25 percent setting it at 5.25 percent. The interest
rated of attracted monetary means and pawn-shop credits are set at
2.25 percent and 8.25 percent respectively.

–Boundary_(ID_1J4wGOdjYIv+gxWmYxJ6 vw)–

From: Emil Lazarian | Ararat NewsPress