PRIME MINISTER OF ARMENIA: LOW INFLATION POSSIBLE IN LATE 2009 GIVEN ITS THREEFOLD REDUCTION COMPARING TO LAST YEAR

ArmInfo
2009-08-06 13:47:00

ArmInfo. Low inflation is possible in late 2009 given its threefold
reduction comparing to the last year, Prime Minister Tigran Sargsyan
told media in the town of Yeghegnadzor. The premier said that
inflation totaled just 3% for the first 7 months of 2009 as against
10.5% for the same period of 2008. He highlighted that 1.5% of the
present 3% inflation is the result of administered electricity and
gas tariffs. "Taking this into account, inflation atmosphere can be
called rather favorable, which makes it possible to expect rather
low inflation for the end of the year," the premier said.

Armenian Central Bank policy of inflation targeting meets the
current crisis situation, Tigran Sargsyan said. "In usual conditions,
central banks in different states follow first of all the financial
stability. In conditions of crisis both the US Federal Reserve System
and the Central Bank of Europe have changed their priorities and
began applying new instruments. For sure, in conditions of financial
crisis economic growth becomes the number one priority, and then
goes stability and only afterwards inflation. At present the Central
Bank of Armenia operates on this system reducing the refinance rate,"
the premier said.

Earlier on July 7 the Armenian Central Bank Council reduced the
refinance rate by 0.5% to 5.5%. Deflation in June versus May totaled
0.3%. Inflation in June totaled 3.6% which was 1% lower than CB
forecasts.