YEREVAN, June 15. /ARKA /. Armenia’s Central Bank has cut Lombard repo rate by 0.5 percentage point to 10.5%, and increased the rate on commercial banks' deposits with the Central Bank by 0.5 percentage point to 5.5%.

In a statement the Central Bank said the moves were meant to reduce fluctuations in interest rates in the interbank market. It said also the objective is to reduce the margin further to 3 percentage point.
The Central Bank said developments in the financial market in May resulted in a 0.13 p.p. rise in average interest rate on government bonds with a 12 month maturity period which now stands at 8.96%; interest rates on repo transactions fell by 0.37 pp to 9.08% and interest rates on interbank repo transactions did not change standing at 9.45%.

‘The Central Bank Board states that the increasing uncertainty over eurozone debt problems resulted in a strengthening U.S. dollar in Russia and EU, Armenia’s major trade partners, which in turn has impacted currency market in Armenia as a result of which the Armenian dram depreciated against USD,’ it said.

According to the report, the Council recognizes that the impact of private spending and fiscal policy on domestic prices is estimated as non-inflationary.

"The Board of the Central Bank has decided to temporarily refrain from greater attenuation of monetary conditions at the expense of refinancing, and left it unchanged at 8%," - the report says. -0-