YEREVAN (RFE/RL)–The Armenian Central Bank has again reduced its re-financing rate–responding to the continuing decline in inflation. Meeting on Wednesday–the Bank’s executive board decided to set the basic interest rate at 33 percent–three percentage points down from what it set earlier in the week.
The move comes amid a fall in consumer prices that started after the first quarter of the year when inflation reached 8 percent. The deflationary trend brought the aggregate inflation rate for the first half of 1998 to a record-low level of 0.9 percent. In July–the composite price index further dropped by 5.4 percent–according to the government. Finance and Economics Minister Edward Sandoyan said last week that protracted deflation would harm the economy–and called for a softening of fiscal and monetary policies.
The re-financing rate peaked at around 55 percent in April but went down to 47 percent by the end of June. According to government projections–inflation should not exceed 10 percent in 1998.