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CB: Threat to 3% inflation rate looming large in Armenia

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  • CB: Threat to 3% inflation rate looming large in Armenia

    CENTRAL BANK: THREAT TO 3-PERCENT INFLATION RATE LOOMING LARGE IN ARMENIA

    Arka News Agency, Armenia
    Aug 2 2006

    YEREVAN, August 2. /ARKA/. Threat to 3-percent inflation rate retaining
    are looming large in Armenia, the Central Bank of Armenia said Tuesday
    in its report.

    At the same time, taking into account economic developments in the
    country, the CBA finds double-digit economic growth is very likely.

    The bank mentioned higher-than-expected oil and metal prices, possible
    further weakening of dollar and geopolitical situation deterioration
    in the world among outside risks. "Imported wheat prices may grow
    because of the poor crop expected this year in Russia and Ukraine",
    the report says.

    Besides outside risks, there are inside ones, the CBA board members
    say in their report.

    Faster-than-expected growth in construction and services areas can
    constitute risks for 3-percent inflation as well.

    The Central Bank also pointed out that the state budget large-scale
    expenditure will have lag impact on inflation growth and will be seen
    in the first half of 2007.

    Increased consumer prices for water, in turn, may negatively impact
    inflation rate within 12-month period.

    That's why the bank doesn't rule out additional changes in interest
    rates in coming months.

    In particular, the central Bank decided Tuesday to raise refinancing
    interest rate by 0.25 percentage points to annual 4.25%.

    National Statistical Service of Armenia says inflation in Armenia
    was recorded at 3.6% in July 2006, compared with December 2005.

    Consumer prices index made 106.8% in July 2006, compared with the
    same month a year earlier, and 100.8% in Jan-July, compared with the
    same period of 2005.

    State budget has planned 3-pecent inflation rate for 2006. M.V.-0---
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