YEREVAN, January 20. /ARKA/. The Central Bank of Armenia will be stuck to a neutral monetary policy in the short run, the central bank’s press office reported on Friday.

The banking regulator also sees no need to change this policy’s directions.

According to the press release, year-on-year inflation was recorded at 4.7% in December 2011, within the projected 4% (±1.5%) rate.

The board of the central bank also placed it on record that inflation pressures coming from the national economy are slight.

Developments in the labor market, particularly the ratio of productivity to nominal salary, produce neutral effect on inflation.

Budget deficit/ GDP ratio is low despite enlargement of social spending.

Tax and budget developments will not fuel inflation.

Individual consumption is recovering, but slowly, without aggravating inflationary pressures.

The fourth quarter’s restraining tax and budgetary policy, along with lag impacts of the previous quarter’s restraining policy will have a neutral impact on aggregate demand.

Given the labor market’s weak inflationary pressures and the neutral impacts of individual expenses, domestic demand will have a weak deflationary impact on inflation.

The central bank also said that the average interest rate on government up-to-one-year bonds rose 1.71 percentage points, compared with the previous month, to 10.68%.

Interest rates on repo transactions went 1.59 points up, and those on inter-banking repo deals rose 0.98 points to 11.22% and 10.24% respectively.

On January 10, the central bank’s board decided to leave the current 8-percent benchmark refinancing rate unchanged. The five-percent interest rate on deposits in commercial banks was left unchanged. The 11-percent pawn repo interest rate was kept pegged as well.

The latest decrease was on September 6, when the regulator downed the benchmark refinancing rate 0.5 points to 8%. -0---