YEREVAN, NOVEMBER 5, NOYAN TAPAN. In accordance with the November 2 decision of the Central Bank of Armenia (CBA), the refinancing interest rate has been raised by 0.25% and set at 5.25%. According to a press release of the CBA press service, a 3.1% inflation was registered in October on September 2007, as a result of which the the 12-month inflation made 5.7%, which is greater by 0.2% than the upper limit of the target inflation of 4+-1.5%. The CBA board confirmed that an unprecedented growth in prices of oil products, wheat, butter and vegetable oil in recent months, together with the continuous tendency to appreciation of the Armenian dram, have lead to the formation of a high inflation environment in the domestic market. In the opinion of the CBA board, it is impossible to neutralize the above mentioned external inflation shocks by means of monetary levers. However, the secondary impact of such developments in the external environment, while combined with an increase in private consumption rates, will continue to maintain the inflation pressures. The CBA raised the refinancing interest rate on October 2 as well. The aim of this policy is to neutralize the accumulated inflation pressures and keep the inflation within the target interval within the next 12 months.

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