ARMENIA C.BANK CUTS RATES TO HELP ECONOMY

London South East
Sept 8 2009

YEREVAN, Sept 8 (Reuters) – Armenia’s central bank cut its refinancing
rate by 25 basis points to 5 percent on Tuesday, as stabilising
inflationary pressures enable it to focus on helping the former Soviet
republic weather the global financial crisis.

‘The central bank board has decided to cut the refinancing rate in line
with financial market trends and which will promote economic activity
without threatening price stability,’ the bank said in a statement.

The landlocked country of 3.2 million people is feeling the impact
of recession in close economic ally Russia.

Lower inflation has allowed Armenia to pursue a policy of monetary
easing from April. Prior to that, the central bank floated the dram
currency to secure a $540 million standby loan from the IMF in March,
at the time raising the refi rate by 100 basis points to 7.75 percent.

The central bank says it sees annual inflation at 4 percent plus/minus
1.5 percentage points. In August, consumer prices rose 3.5 percent
year-on-year, at the lower end of the regulator’s forecast range.

Central bank governor Athur Javadyan told Reuters in July that
Armenia’s economy would likely contract 7-8 percent in 2009.

The forecast was between the bank’s previous estimate of a 5.8 percent
contraction and the 9.5 percent slump forecast by the International
Monetary Fund in late June.

GDP contracted 18.5 percent in January-July in comparison with 10.6
percent growth in the same period last year.

From: Emil Lazarian | Ararat NewsPress