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Central Bank of Armenia board keeps key rate at 7.5%.

YEREVAN, March 25. / ARKA /. The Central Bank of Armenia Board said today it has decided to keep its key refinancing rate at 7.5%.

The bank said a 1.2 percent deflation was reported in February against 0.4% deflation in the same month last year, bringing the 12-month inflation at the end of February to 4.6%.

The Board said also it expects the 12-month inflation to continue the downward trend in the next months and especially in the third quarter, to drop close to the lower threshold of the target band due to elimination of the impact of increased electricity and gas prices that came into effect in 2013 July.

The Board also fixed an increased uncertainty at external sector due to geopolitical developments. The Board said low economic growth rate maintained at the beginning of the year due to slow recovery of the construction industry.

It said the ongoing facilitation of money terms along wit anticipated expansion of the fiscal policy in the second half of the year are supposed to boost the gross demand and increase inflation rate.

It said the year-end inflation rate will be within the target band. It said also the depreciation of the national currency and the lowered reserve requirement enforced at the start of the year are also expected to boost gross demand.

Last time the Central Bank revised its key refinancing rate was on February 11 when it cut it down by 0.25 percentage points to 7.5 percent. The government projection of the inflation rate for this year is 4% (±1.5%). It also expects the GDP to grow by 5.2%. -0-

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