ARMENIAN CENTRAL BANK PREDICTS 3.5% INFLATION FOR LATE 2009

ARKA
July 30, 2009

YEREVAN, July 30. /ARKA/. The Central Bank of Armenia predicts 3.5%
inflation for late 2009.

In its monetary policy program for the 3rd Q of 2009, the Central Bank
also forecast 2.7% inflation by the end of the second quarter 2010.

According to the Central Bank’s forecast for 12 months, the inflation
will mainly be caused by the large adverse gap on domestic demand.

But the bank also expects the cabinet’s bailout measures and the
Central Bank’s expansionary policy are expected to produce certain
effect, and the national economy will start rallying at the end of
that period.

Under these circumstances, the current inflation pressures will
gradually be mitigating, and inflation will remain stuck to the
planned 4±1.5% throughout 12 months.

Besides, the Central Bank doesn’t rule out risks of inflation decrease
or increase, depending on the government’s bailout steps, recovery of
the world economy and implementation of large-scale regional transport
and energy programs.

To speed up the recovery of the economy, the Central Bank of Armenia
will continue pursuing expansionary policy and driving refinancing
rate down.

Along with that, the Central Bank finds it important to ensure
maximally smooth utilization of the cash being pumped in the economy.

At the second quarter of 2009, 4.5% inflation was recorded in Armenia,
0Aand the year-on-year inflation reached 3.6%, after rising 2.6
percentage points, compared with the previous quarter.

Natural inflation rate was recorded at 2.1% at the 2nd Q of 2009,
and year-on-year natural inflation – 3.4% – remained almost unchanged,
compared with the previous quarter.