EXTERNAL SHOCKS CAUSE 3% INFLATION IN ARMENIA

ARKA News Agency, Armenia
Nov 13 2007

YEREVAN, November 13. /ARKA/. 1.2% deflation could have been recorded
in Armenia in October 2007 if not external shocks, as a result of
which 3% inflation took place in Armenia.

Refinancing interest rate in October 2007 totaled 5.7% against October
2006 or 1.4% including external factors, the Central Bank of Armenia
(CBA) reports.

Rise of market prices in Armenia is mainly conditioned by external
factors. Particularly, prices for bread made products, vegetable oil
and ghee increased by 21% and 31% correspondingly in June-October.

This caused 3.1pct and 1.3pct inflation correspondingly.

The CBA Board calls abrupt price fluctuations an external shock which
is impossible to overcome by monetary measures.

The CBA Board believes the external inflation pressure should be
overcome, as the latter, together with high temps of consumption
and large-scaled expenditures, will cause inflation in the coming
twelve months.

In this connection, the CBA plans to implement a new monetary
policy.During its sitting on November 2, the CBA Board made a decision
to raise the annual refinancing interest rate by 0,25pct to 5.25%.

Annual deposit rates and collateral loans now total 2.25% and 8.25%
correspondingly. 4% (±1.5%) inflation is planned by the RA state
budget in 2007.

The CBA notifies that inflation risks caused by external factors
occur all over the world.

–Boundary_(ID_X4qEp1M590nt3bphOQhhMQ)–