Armenia's Central Bank keeps its refinancing rate unchanged at 8%

YEREVAN, July 11. /ARKA/. The Board of Armenia’s Central Bank said Tuesday its refinancing rate will stay unchanged at 8%. 

According to the source, the 12-month inflation was 0.7%, lower of the accepted 4 ±1,5% range, as  Armenia faced 1.3% deflation in June of 2012. 

The Board stated the tendencies defined in the second quarter of 2012 actually met the basic scenario outlined in the second-quarter monetary-credit policy which excluded inflation. 

Deflation at the global raw and food markets will go on gaining shape in spite of the slight rise in wheat prices touched off by the world wheat harvest reduction, the source informs.

The Board acknowledges, however, that the global economic situation may cause some inflation jump in Armenia. This will be due to economic growth (due to high growth rates in industry and services) which will have an impact on the stimulation of the aggregate demand, and on the maximum high growth rates in private consumption. 

The impact of tax and budget policy on prices policy is assessed as a neutral one.

“Taking into account mutually neutralizing impacts of outer and inner factors on domestic prices, as well as the ongoing June tendencies of dram devaluation, which is actually appears as softening of monetary-credit policy, the Board has reached the decision to keep the refinancing rate unchanged. Such decision was also incited by low level of the 12-month inflation that, in turn, was prompted by the seasonal tumbles in agricultural products’ prices,” the Central Bank states.

Last time the Central Bank changed the refinancing rate on September 6 of 2011 to 8% from 8.5%. In the state budget of Armenia for 2012 the inflation rate is projected at 4% (±1,5%).–0-