ARMENIAN CB RAISES ANNUAL REFINANCING RATE

ARKA
Sep 3, 2008

YEREVAN, September 3. /ARKA/. The Board of the Central Bank of
Armenia (CBA) decided to raise the annual refinancing rate by 0.25%
up to 7.75%.

The CBA Board confirmed the weakening inflationary pressure this
August, which, however, has not affected the domestic prices. The main
reason is both obstacles to the import of products to Armenia as a
result of the latest developments in the region and slow reaction of
domestic prices to external factors because of the defective market
for some products.

The CBA Board believes that keener domestic demand will not cause new
inflationary pressures provided the obstacles to the import of goods
to Armenia are removed soon. Otherwise, there is a serious risk of
higher inflation rates and lower long-term economic growth rates.

The CBA Board attaches high importance to the task of lowering
inflation expectations in the country and reducing any deviations
from the inflation targets to a minimum in the context of the current
developments in the region and their unpredictability. The CBA Board
is sure that further specification of the refinancing rates will
depend on the regional developments, reaction of domestic prices to
international prices.

An inflation rate of 0.7% was recorded in Armenia this August. However,
an annual inflation rate of 11.5% was recorded in Armenia – a
rise of 0.8%, which resulted from the latest devel opments in the
region. Specifically, a rise in the prices for baked goods was
recorded instead of the forecast fall. An inflation rate of 4%
(±1.5%) is budgeted in Armenia for this year

–Boundary_(ID_1rlonUrluZM5LVCPMYx5nA)–