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Armenian Central Bank raises refinancing rate one point to 10.5%

YEREVAN, February 10. /ARKA/. The board of the Central Bank of Armenia raised Tuesday the refinancing rate by one percentage points to 10.5%, the regulator’s press office reports.

According to the press release, at its session the board also placed it in record that inflation stood at 2.5% in January 2015, and 12-month inflation reached 4.3% in late January coming close the projected rate.
The board predicted that 12-month inflation would go up in the next months, compared with the previous year’s low general indicator, but after that it will return to the targeted rate.

It also said that certain speedup was seen in the U.S. economy in 2015 along with outlooks for increase in interest rates that contributed to the U.S. dollar’s revaluation and price falls at the world’s food and raw materials markets.

This drove investment risks in developing countries up, which, in turn, enhanced volatility at developing countries’ forex markets, increased interest rates and slowed down economic growth.

The board says the consequences of these developments and geopolitical things that affected Armenia’s financial and trade markets by the end of 2014 will gradually smooth over.

“Under these circumstances, the board of the Central Bank of Armenia finds it reasonable to down short-term market rates, which are now formed as part of collateral repo rate, and to lower collateral repo rate by 2.5 percentage points to 14.5%,” the press release says. “Along with return to natural things, short-term market rates will go down coming close to the refinancing rate, which was raised to 10.5%, reflecting long-term outlooks for growth of investment risks and increase in rates in developing countries.”

The Central Bank’s board also says that the mentioned measures will narrow the difference between the regulator’s policy and short-term market rates, which will create favorable environment for stabilization at financial market and will ensure achievement of the projected inflation rate over the medium term.

The central bank’s previous refinancing rate change was on January 22, 2014. The regulator then raise it from 8.5% to 9.5%. ——0—–

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