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CENTRAL BANK FORCED TO TAKE STEP THAT'LL MAKE THINGS WORSE
Roza Hovhannisyan, Reporter
Business - 12 February 2015, 13:01
The Central Bank has set a refinancing rate at 10.5%, which will make
the situation in the Armenian economy worse, the economist Vardan
Bostanjyan told Lragir.am, commenting on the Central Bank's decision.
On February 10 the Central Bank increased the rate of refinancing by
1%, setting the rate at 10.5%. The reason for such a decision was the
inflation rate in January which exceeded the rate target. According
to the clarification of the Central Bank, in January 2015 inflation
was at 2.5%, 12-month inflation by the end of January was 4.3%,
being very close to the rate target.
The Central Bank finds that over the next months the 12-month inflation
will rise a little.
"A 10.5% refinancing rate is an obviously negative indicator but the
monetary authorities are not doing it for their pleasure. The bad
scenario of current inflation in the country, as well as instability
in the financial market supposes and requires increase of the interest
rate. The monetary authorities have no alternative to this step but
this is a very negative phenomenon for the economy," Bostanjyan says.
A raised rate of refinancing means that banks will increase interest
rate on loans.
Vardan Bostanjyan notes that the Armenian economy is facing lack of
investments, SMEs are paralyzed, about 10,000 SMEs have closed.
"At the moment, statistics indicates that inflation is higher than
the projected rate. In reality, it is a bigger number than official
statistics states. In this situation the monetary authorities were
forced to increase the refinancing rate," he noted.
The economist thinks the efforts of the organizations in charge of
the financial sector are not enough, a coordinated economic policy
must be conducted.
"Without coordination we should simply expect the negative consequences
what we are seeing now," Vardan Bostanjyan said.
Note that according to the NSS, in January 2015 inflation reported
in the consumer market was at 2.5% compared with December 2014 due
to a 4.5% increase of food prices. In January prices of almost all
kinds of food increased compared with January 2014. Mostly the prices
of necessity goods increased. Prices of bread increased by 10.4%
compared with last January.
http://www.lragir.am/index/eng/0/economy/view/33623#sthash.g7x0MEtt.dpuf
Roza Hovhannisyan, Reporter
Business - 12 February 2015, 13:01
The Central Bank has set a refinancing rate at 10.5%, which will make
the situation in the Armenian economy worse, the economist Vardan
Bostanjyan told Lragir.am, commenting on the Central Bank's decision.
On February 10 the Central Bank increased the rate of refinancing by
1%, setting the rate at 10.5%. The reason for such a decision was the
inflation rate in January which exceeded the rate target. According
to the clarification of the Central Bank, in January 2015 inflation
was at 2.5%, 12-month inflation by the end of January was 4.3%,
being very close to the rate target.
The Central Bank finds that over the next months the 12-month inflation
will rise a little.
"A 10.5% refinancing rate is an obviously negative indicator but the
monetary authorities are not doing it for their pleasure. The bad
scenario of current inflation in the country, as well as instability
in the financial market supposes and requires increase of the interest
rate. The monetary authorities have no alternative to this step but
this is a very negative phenomenon for the economy," Bostanjyan says.
A raised rate of refinancing means that banks will increase interest
rate on loans.
Vardan Bostanjyan notes that the Armenian economy is facing lack of
investments, SMEs are paralyzed, about 10,000 SMEs have closed.
"At the moment, statistics indicates that inflation is higher than
the projected rate. In reality, it is a bigger number than official
statistics states. In this situation the monetary authorities were
forced to increase the refinancing rate," he noted.
The economist thinks the efforts of the organizations in charge of
the financial sector are not enough, a coordinated economic policy
must be conducted.
"Without coordination we should simply expect the negative consequences
what we are seeing now," Vardan Bostanjyan said.
Note that according to the NSS, in January 2015 inflation reported
in the consumer market was at 2.5% compared with December 2014 due
to a 4.5% increase of food prices. In January prices of almost all
kinds of food increased compared with January 2014. Mostly the prices
of necessity goods increased. Prices of bread increased by 10.4%
compared with last January.
http://www.lragir.am/index/eng/0/economy/view/33623#sthash.g7x0MEtt.dpuf