YEREVAN, August 16. / ARKA /. Chairman of the Armenian Association of Employers downplayed today concerns that the Central Bank’s decision to raise by 50 basis points its key refinancing rate to 8.5% will prompt a rise in lending interest rates.

Speaking at a news conference Gagik Margarian cited several reasons why interests on loans will not rise. The first reasons is that most of the banks' resources come from deposits and other sources, not from the Central Bank.

Besides, he said the current policy is aimed at improving lending terms and as part of it international lending organizations provide fresh loans to Armenian banks for on-lending to SMEs and agriculture. He said the banks will not raise the interest rates also because they need new customers.

Armenia’s central bank raised its benchmark refinancing rate by 50 basis points to 8.50 percent earlier this week, saying it expects inflation to slowly decline in coming months amid slower economic growth, which will allow the central bank to loosen monetary conditions.

“The Central bank Board agreed that inflation will gradually return to target levels and will remain in the permissible variation range,” the CBA said.

The Armenian central bank targets inflation of 4.0 percent within a 1.5 percentage point band. M.M.-0-