YEREVAN, November 12. / ARKA /. The Board of Armenia’s Central Bank has lowered today its key refinancing rate by 0.5 percentage point to 8 percent, saying also that inflation in October rose by 0.3 percent and as a result the 12-month inflation rate continued to decline falling to 7.1 percent in late October 2013.

According to the regulator, the drop in inflation resulted from its tightening monetary conditions and lower than anticipated rate of economic growth. The Board believes that the 12-month inflation rate will continue to decline also in the coming months.

The Board stated that the external sector was within projected frames amid the slow recovery of global economy that brought about no-inflationary environment to international commodity markets.
The Board said these developments suggest that no inflationary pressure is expected from external sector.

The Board also stated that the Armenian economic growth slowed in the first nine months due to the drop in construction sector as well as high inflationary environment, prompted by increased prices of energy.

It said also the government fiscal policy contributed to the formation of low domestic demand, however, in the fourth quarter it launched a fiscal expansion policy, which according to next year’s draft budget will continue throughout 2014.

The Board believes that the future direction of the monetary policy of the Central Bank will be contingent on the process of the implementation of fiscal policy.

The Board concluded that as a result of anticipated economic developments the 12 -month inflation will return to the target level in mid 2014. -0-