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Central Bank of Armenia says yearend inflation may drop to 5.5%-7.5%

YEREVAN, May 3. / ARKA /. The Central Bank of Armenia forecasted in its money and credit policy program for the first quarter of 2011 that the yearend inflation may drop to one digit 5.5%-7.5%. But the figure would still be above the maximum level of 4% (±1,5%) targeted by the Armenian authorities.

This forecast is based on the assumption that the current market rates would be preserved, which means that all potential inflation changes are taken into consideration given that the current money and credit policy will not change.

The Central Bank predicted that the six month inflation rate will still be high, largely due to unprecedented rise of prices of agricultural goods started late last year as well as rising global food and commodity prices.

According to the Central Bank program, the inflation rates will start going down from the beginning of the third quarter and may drop to 5.3% by yearend. The Central Bank said also that in conditions of uncertainty the probability is high that inflation deviation may reach 41% form the projected target of 4%. This in view the Central Bank predicts that the annual inflation rate may be between 5.5%-7.5%.

Earlier prime minister Tigran Sarkisian and other Armenian officials predicted that inflation will fall by the end of the year thanks to robust growth projected in the agricultural sector.  -0-

Inflation interval Inflation

interval probability

II

quarter 2011

IV

quarter 2011

<

3,0%

0,00% 1,4%
3,0 – 4,0% 0,00% 7,1%
4,0 – 5,5% 0,00% 31,0%
5,5 – 7,5% 0,04% 40,9%
7,5 – 9,5% 41,4% 16,5%
9,5%

<

53,9% 2,6%

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