Tuesday, November 6 2012 21:25
Board of Central Bank of Armenia retains refinancing rate at 8%
ArmInfo. The Board of the Central Bank of Armenia (CBA) has retained the refinancing rate at 8%. The CBA press service told ArmInfo that the relevant decision was taken at the CBA Board's sitting on Tuesday.
The source says that 1.2% inflation was fixed in Armenia in October, and the annual inflation level rose to 3.4%, having approached the target (4%).
The Board states that the country still experiences the weak inflationary impact of the foreign sector within the short-term outlook. In the meantime, low international demand is expected amid the political uncertainty around the developed countries' debt problems.
Nevertheless, the world prices of wheat are still high, which demonstrate the tension in the international food markets. This, in turn, affects the domestic prices and has a big effect on the prices of cereals. Inflation risks stemming from fluctuations of the world prices of energy resources are not ruled out either.
Internal inflationary pressure is ebbing due to climbing individual consumption and continuing economic growth.
Keeping in mind that external inflationary pressure is week, the CB prefers not to change the rate of refinancing and expects inflation to approach the target 4% level in the coming months.
In order to reduce interest rate fluctuations on the inter-bank market it has cut the margin between lombard repo and deposit rates from 4% to 3%.
The last time the CB changed the rate of refinancing was Apr 12 2011 when it reduced it from 8.5% to 8%.
On Tuesday the CB reduced Lombard repo rate from 10% to 9.5% and raised deposit rate from 6% to 6.5%.
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