YEREVAN, JUNE 3, NOYAN TAPAN. At the June 3 sitting, the Central Bank of Armenia (CBA) Board raised the interest rate of refinancing by 0.25%, fixing it at 7%. Accoridng to the CBA press service, 1.3% inflation was registered in May on April 2008, as a result of which the 12-month inflation made 9.9%. Although it declined by 0.8% as compared with the level of inflation in April 2007 - April 2008, the 12-month inflation continues to exceed the upper limit of the target level by 4.4%. The CA Board states that despite the fact that inflation pressures from the external environment show a tendency to decline, which has been reflected in a reduction of international prices of foodstuffs, particularly grain and rice prices, prices of oil products remain high, maintaining potential for growth. Expected growth rates of gross demand and the continuing secondary impact of external inflation pressures also involve additional inflationary risks. Attaching importance to reduction of inflation expectations and deviations from the target level, the CBA Board said that further specification of the CBA refinancing interest rates will be conditioned by the amount and speed of domestic prices' response to the indicated tendencies concerning food prices in international markets in the coming months.

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