Armenian Central Bank: Gradual reduction of interest rates to boost
economy

2009-08-22 14:48:00

ArmInfo. Armenian Central Bank Council has discussed both gradual and
sharp reduction of interest rates taking into consideration low use of
liquidity and selected gradual reduction of interests as the most
reasonable measure to boost economy without endangering price
stability.

CB Council has repeatedly declared that in conditions when GDP is
falling sharper than envisaged and there is certain inflation pressure
from the external sector, there is low internal inflation environment.
Nevertheless, the Council mostly connected the 2.7% deflation in July
with significant fall of the prices of agricultural produce
characteristic to the given season. This testifies to lack of deflation
trends. Nevertheless, the Council has arrived at a conclusion that the
forecasted inflation will be at the lowest target limit. In such
conditions, the Council considered grounded the policy of active
increase of the refinancing volumes and reduction of the
refinancing-rate to contribute to sooner rehabilitation of the local
economy.

Armenian CB Council reduced the refinancing-rate from 5.5% to 5.25% on
August 11 2009. Interests of deposits and Lombard loans are 2.25% and
8.25% restively.