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Central Bank Of Armenia Leaves Interest Rate Unchanged In October

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  • Central Bank Of Armenia Leaves Interest Rate Unchanged In October

    CENTRAL BANK OF ARMENIA LEAVES INTEREST RATE UNCHANGED IN OCTOBER
    by Venla Sipila

    World Markets Research Centre
    Global Insight
    October 6, 2008

    The Central Bank of Armenia (CBA) has decided to leave its policy
    interest rate, the annual refinancing rate unchanged at 7.75% in
    September, ARKA News reports. The decision follows eight successive
    months of 25-basis-point interest rate rises, the latest of those
    having taken place in September (see Armenia: 3 September 2008:
    ). The CBA based its October decision to leave the policy rate stable
    on weakening external inflation pressures in the third quarter of
    the year, noting that domestic prices for fuel and some foods have
    decreased. In addition, the CBA indicates that inflation pressures
    from domestic demand remained modest. The board of the CBA sees that
    while fuel and food prices are only easing slowly, this development
    should continue. The latest inflation data for Armenia showed annual
    price growth moderating to 11.3% in September, after standing at 11.5%
    in August (see Armenia: 3 October 2008: ).

    Significance: Easing of annual inflation is likely to continue in
    Armenia, with moderating world market prices of commodities. However,
    the CBA would be well advised to be cautious in further monetary
    loosening, before further signs of easing of domestic demand-side
    pressures are seen. Armenian economic growth still remains in double
    digits, and is driven by domestic spending, boosted for example by
    fiscal expenditures.
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