Georgian National Bank increases refinancing rate to 10.5%

The National Bank of Georgia (NBG) has increased the refinancing rate by 0.5 percentage points to 10.5% earlier today at the Monetary Policy Committee (MPC). 

The NBG states that increased inflation has been one of the main challenges for Georgia in recent years.

The extraordinary situation caused by the pandemic created many challenges for the world economy, with a high inflationary environment that is particularly concerning,” the NBG says.

• November 2021: annual inflation rate at 12.5%

Georgia’s annual inflation in November, 2021 grew by 0.6% and amounted to 12.5%, the National Statistics Office of Georgia (Geostat) reported.

The NBG says that a surge in consumer commodity prices on international markets, transmitted to the local market through imported raw materials and finished goods, is one of the key factors that contributed to high inflation.

Although the exchange rate has appreciated relatively year-on-year, the imported inflation was 18% in November,” the NBG says.

• National Bank of Georgia: annual inflation will be higher than expected

NGO Society and Banks says that 169,700 loans tied to floating interest rates remain active as of December 1, 2021, which means that the prices of these loans may grow as well because of the increased refinancing rate.

The total volume of the issued loans tied to floating interest rates amounts to 8.39 million GEL, Society and Banks reports.

The next meeting of the Monetary Policy Committee will be held on February 2, 2022.