ARMENIA’S CENTRAL BANK RAISES ANNUAL REFINANCING INTEREST RATE BY 0.25% TO 7.25%

ARKA
July 2

The Central Bank of Armenia (CBA) has increased the annual refinancing
interest rate by 0.25% to 7.25%.

The CBA Board reported at today’s meeting that the reduction of food
prices in the world market for the past months have not had an impact
on the local market. They did not forecast when exactly these global
effects will work their way to Armenia’s market.

At the same time, record-high oil prices keep rising, the global market
still having to face both direct and indirect inflationary pressure.

Focusing on the ways to curb possible inflation in the country, the
CBA Board decided that further changes in the refinancing interest
rate will depend on the measures undertaken to curb inflation.

Deflation was 0.5% in Armenia in June 2008. The annual inflation (9.4%)
exceeded the Central Bank’s inflation target by 4%. According to the
RA budget, 4% (±1.5%) inflation is expected in Armenia as of end-2008.

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