Central Bank of Armenia keeps its key refinancing rate at 8%

YEREVAN, March 26. / ARKA /. The Central Bank of Armenia decided on Tuesday to keep its key refinancing rate at 8%.  It said also a 0.4 percent deflation was reported in February. As a result the 12-month inflation was 3.1%.

According to the Central Bank, the uncertainty about political solutions to the debt problems of the developed countries persisted along with slowing global economic growth trend. The Central Bank also mentioned moderate growth trend at major international markets of basic commodities and inflation trends at major global food markets.

These developments in mind the Central Bank said in the forecast horizon the world economy is expected to demonstrate slow growth rate. Therefore, no external sector-prompted inflation is expected.

The Central Bank said also in view of the latest economic developments in Armenia, real economic growth has exceeded expectations, driven mainly by growth in manufacturing and services, exceeding forecasts, which were accompanied by higher than expected growth in private spending.

During this period the fiscal policy was more restrained, compared to the baseline scenario, laid down in the monetary policy program designed for the first quarter of 2013, which, in general, leveled the inflationary impact of the private demand on domestic prices.

Under these conditions, as expected, the impact of inflation on the domestic economy in the forecast horizon will be inflationary weak.

"In view of the expected low impact of the inflation environment on future behavior of the 12-month rate of inflation, the Central Bank considers it expedient to continue implementation of its planned neutral monetary policy, and leaves the key refinancing rate unchanged. The Central Bank believes that until the second half of the year the 12-month inflation will move closer to the projected  4%  and will remain in the forecast horizon within this corridor." -0-