Tuesday, September 6 2011 16:30

Armenia's Central Bank softens monetary-credit terms and reduces rate of refinancing from 8.5% to 8%


ArmInfo. After keeping the rate of refinancing at 8,5% since Apr 2011, the Central Bank of Armenia decided Tuesday to reduce it to 8%.

The press service of the CB reports that this will help the CB to keep inflation within the target range of 4% (+/-1.5%) and to stimulate economic activity.

In Aug 2011 there was 0.6% deflation in Armenia. As a result, annual inflation dropped by 1.5% to 4.8%.

The CB reports that external factors have neutral effect on inflation and may even produce certain deflation risks. However, it is still unclear how the global economy will develop as most of the developed countries are showing little stability.

The influence of the home demand on inflation is declining. Private spending is neutral, while the fiscal policy is restrictive. The labor market also has neutral effect on inflation. The dynamics of inflation in the last months were in tune with the targets of the CB's monetary- credit program.

May 11 2010 the CB raised the rate of refinancing from 7% to 7.25%, Feb 8 2011 – to 7.75%, Mar 4 2011 – to 8.25%, Apr 12 2011 - to 8.5%.
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