YEREVAN, OCTOBER 5, ARMENPRESS. Short-term market interest rates will decrease parallel to the return to normal economic situation.  Deputy Chairman of the Central Bank of the Republic of Armenia (CBA), Nerses Yeritsyan, mentioned about this during the discussion of annual monetary policy report of 2014 at the National Assembly.

“Considering the fact that the 12 month inflation rate of exceeded the predictions conditioned by the impact of sharp decline of currency influx at the end of the year, rubble inflation, dram depreciation and signs of expansion of inflationary environment, the Central Bank took drastic actions in respond to the situation. Particularly, Lombard repo rate was increased from 8.25% to 21.0% starting from the end of November. Afterwards, mandatory reserve requirements for foreign funds was increased from 12.0% to 24.0%”, “Armenpress” reports, he emphasized.

Short-term market interest rates recorded sharp increase as a result of CBA's tightening of financial market conditions.  AT the end of 2014 and at the beginning of 2015 the CBA decreased the Lombard rate reaching it to 14.5% which directly caused decrease in short-term market interest rates.

At the same time, to mitigate further inflationary pressures, the CB increased the refinancing rate by 1.75 percentage point at the end of December. This process continued also at the beginning of 2015, increasing the refinancing rate up to 10.5%.