YEREVAN, May 11. /ARKA/. The Central Bank of Armenia said in its monetary policy program for the 2^nd Q 2011 that it was 86% sure that inflation would be recorded between 4% and 7.5% in Armenia by the end of this year.

In the 2011 government budget, inflation is projected at 4% (±1.5%).

The regulator’s forecast is based on estimates of likely inflation changes under the tightened monetary policy and the unchanged interest rates on obligatory reservation.

The central bank predicts that year-on-year inflation rate would remain high in the second half of this year due to the unprecedented price hike in agriculture market in 2010 and world prices for foods and raw materials.

According to the central bank’s outlooks, if consequences of the mentioned shocks are neutralized, inflation will slow down and come close to the projected 4±1.5%.

“Inflation risks dominated the previous outlooks, while now their gradual balancing is seen – risks connected with agriculture and outside markets as well as those connected with domestic demand are balanced,” the central bank says in its program.

The regulator says that inflation deviation from the projected average of 4% is very likely amid uncertainty..-0---