CBA BOARD LEAVES 5% REFINANCING RATE UNCHANGED

Noyan Tapan
Oct 15, 2009

YEREVAN, OCTOBER 15, NOYAN TAPAN. The Central Bank of Armenia (CBA)
Board made a decision to leave the 5% refinancing rate unchanged. The
interest rates of attracted deposits and lombard loans were fixed
at 2% and 8%, respectively. Taking into consideration the present
macrosituation and the developments in the financial market, the
CBA Board believes that the current level of the refinancing rate
most efficiently contributes to a rapid recovery of the economy,
while not endangering the stability of prices.

According to the PR service of the CBA, based on the new results
received by using the model of quarterly forecasts, the CBA Board
agreed that under conditions of the expectations regarding the
recovering rates of economic growth and the continuous tendencies to
a growth in international prices in the forecast 12-month period,
in case of unchanged monetary conditions, the inflation rate will
increase to some extent in the next 6 months, reaching the upper limit
of the target interval in late 2009 and even exceeding it in the first
quarter of 2010. Starting from the second quarter, when the 12-month
inflation index will not include the impact of the exchange rate’s
sharp devaluation in early March 2009 and the increase in municipal
payments in April, inflation will return to the permissilbe interval
of fluctuations.