National Bank of Georgia keeps refinancing rate unchanged at 8%

The National Bank of Georgia will keep its monetary policy rate unchanged at eight percent.

The Monetary Policy Committee (MPC) of the Bank met yesterday and decided not to change the current refinancing rate.

In a statement today the Bank said any future decisions regarding the monetary policy would be based on the country’s macroeconomic forecast.

In 2015 the NBG tightened the country’s monetary policy several times in response to increased inflation expectations.

Further changes to the monetary policy will depend on the inflation forecast, factors affecting inflation and the general state of the economy, said NBG.

The NBG predicted at the beginning of 2016 inflation will remain above its five percent target value but will start decreasing gradually before returning to its target of five percent in the second half of 2016.

In January 2016 monthly inflation was up by 0.9 percent following price changes to several major commodities in the consumer basket, said the National Statistics Office of Georgia (Geostat) today.

The NBG added, year-on-year (y/y) the consumer price increased 5.6 percent in January 2016.

The estimated annual growth of Georgia’s real Gross Domestic Product (GDP) equalled 2.8 percent in 2015. The country’s GDP grew 0.3 percent y/y in December 2015. The estimated real GDP growth reached 2.9 percent in the fourth quarter (Q4) of 2015 y/y.

The NBG said the effect of external shocks on the national currency Lari was over however the Georgian currency was continuing to devalue against the US dollar.

Today the NBG official exchange rate saw one US dollar equal 2.4763 GEL.

The previous exchange rate was 2.4702 GEL.

The Bank said tightening the country’s monetary policy caused an increase in the interest rate and affected people who had loans in the US dollar and earned their income in Lari.

The next meeting of the Monetary Policy Committee will be held on March 9, 2016.