Georgian Central Bank head talks prolonged high inflation, need for “stronger reaction”
“Some central banks in emerging markets, including the NBG, had already tightened monetary policy preemptively at the onset of policy normalisation cycle in advanced economies and as a response to emerging inflation expectations,” Gvenetadze told the conference. Photo: National Bank of Georgia
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The need for the central banks’ “vigilance” and monetary authorities’ “strong reaction” to a prolonged high inflation were the subjects raised by Koba Gvenetadze, the Head of the National Bank of Georgia, at a conference organised by the Columbia University, the Bank announced on Tuesday.
In his address to the annual conference Challenges and Responses to Inflation and Market Fallouts from Emerging Market Economies, the NBG head noted inflation had been rising worldwide before the launch of the Ukraine invasion by Russia in February, adding supply-demand mismatches and increasing commodity prices had been “pushing inflation up” since early 2021.
He said the “recent inflation risks” had forced central banks in emerging markets to “further accelerate policy tightening to contain expectations which are swiftly rising due to lingering inflation.”
Some central banks in emerging markets, including the NBG, had already tightened monetary policy preemptively at the onset of policy normalisation cycle in advanced economies and as a response to emerging inflation expectations,” Gvenetadze told the conference.
Organised by Columbia University, the annual event is held following the Spring Meetings of the International Monetary Fund and the World Bank, which took place in Washington between April 18-24.
The NBG increased its refinancing rate by 0.5 percentage points to 11 percent on March 30 due to increased risks of high inflation expectations and inflation being above the target for a prolonged period of time.
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Held in a digital format, the discussion took place between finance ministers and central bank chiefs of the Caucasus and Central Asia.
The Consumer Price Index in Georgia grew by 1.8 percent in April 2022 month-on-month, while the annual inflation rate totalled 12.8 percent, the National Statistics Office of Georgia announced on Tuesday.
The Georgian finance system’s joining of the international sanctions imposed against Russia due to its invasion of Ukraine has been praised by the international regulators, Koba Gvenetadze, the Head of the National Bank of Georgia said on Wednesday.
The National Bank of Georgia is keeping the refinancing rate unchanged at 11 percent following a meeting of its Monetary Policy Committee on Wednesday.
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