ARMENIA’S CENTRAL BANK CUTS REFINANCING RATE BY CAUTIONS 0.25% TO 5.25%

ARKA
Aug 12, 2009
Yerevan

YEREVAN, August 12, /ARKA/. Armenia’s Central Bank said Tuesday it has
reduced its main interest rate by a "cautious" quarter of a percentage
point and will lower the refinancing rate to 5.25%.

A press release by the Central Bank said a 2.7% deflation was
registered in July against June helping the 12 month inflation rate
to stand at 3.1%. The Central Bank said expectations of a minor
improvement of the global economy have pushed raw commodities’
prices a little up, but it added that the 2.7% deflation was largely
accounted for by seasonal fall of prices of agricultural goods. Under
these conditions although prices of non-food goods and services rose,
the natural inflation rate was stable.

"Having in mind the current microeconomic environment, the Central
Bank Board emphasizes the expansion of monetary and credit policy
which is expected to promote economic recovery without jeopardizing
the price stability,’ the press release said.

This is the sixth time that the Central Bank has cut rates after
March 3 when it raised the refinancing rate by one percentage point
to 7.75% right after announcing the return to the floating exchange
rate of the Armenian national currency Dram. Later, on April 7 the
Central Bank lowered the refinancing rate to 7.5% and to 7.25% on
May 12. On May 22 the rate was cut b y 1 percentage point to 6..25%,
on June 9 it was reduced to 6% and to 5.55 on July 7.