Central Bank increases refinancing rate to 6.75% to deal with inflation

The National Bank of Georgia (NBG) has decided to increase its refinancing rate in response to expectations of increased inflation.

The Monetary Policy Committee (MPC) of the Bank met today and decided to increase the refinancing rate by 25 basis points to 6.75 percent.

The NBG said the monetary policy decision was based on macroeconomic projections forecasting inflation in upcoming months – further changes to monetary policy will depend on actual inflation, factors affecting inflation and the general state of the economy.

The cost of basic foodstuffs and transport has risen in recent months, show the latest data from the National Statistics Offices of Georgia (Geostat).

Georgia’s monthly inflation rates amounted to one percent in December, while the annual inflation rate (Consumer Price Index change) increased by 1.8 percent, following price changes in several major commodities in the consumer market.

Inflation is expected to remain above its target value in 2017, "but it will reduce in 2018 and will remain below its target value,” said the NBG.

The next meeting of the Monetary Policy Committee will be held on March 7.