National Bank of Georgia reduces refinancing rate to 10.50% following reduction in inflation
The National Bank of Georgia on Wednesday announced a “gradual exit” from its tight monetary policy. Photo: Nino Alavidze/Agenda.ge
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The National Bank of Georgia on Wednesday announced a “gradual exit” from its tight monetary policy, as it decreased the refinancing rate by 0.5 percent, to 10.50 percent, following a reduction in the domestic inflation rate.
The Bank said inflation in the country was on a “downward trajectory”, mostly driven by reduced prices on international commodity markets and decreased international shipping costs that had gone down to their pre-pandemic levels.
After a prolonged period of high inflation, inflation being below the target in the short run will help further normalisation of long-term inflation expectations. The latter, in turn, is a prerequisite for price stability”, it said.
The NBG said while inflationary pressures coming from international markets had been neutralised, domestic inflation was also declining “even if at a relatively slow speed, and is expected to keep this downward trend throughout the year”.
The Bank also shared its projections, saying economic growth would be close to the “potential level” this year, at around five percent, while the annual inflation rate was expected to decline further below the target and stabilise at around three percent in the medium term.
It also noted economic uncertainty - related to increased labour costs and “geopolitical tensions” - was still high in the country despite the trends, adding it would only “continue to reduce the monetary policy rate at a slow pace”.
The next meeting of the NBG’s Monetary Policy Committee will be held on June 21.
Prices on food and non-alcoholic beverages, furnishings, household equipment and maintenance increased in Georgia in January month-on-month, while prices for clothing and footwear decreased, the latest inflation data from the National Statistics Office of Georgia shows.
While annual inflation in Georgia has “passed the peak” and is on a downward trend, the country’s National Bank will pursue a “tight monetary policy” throughout the year to “reduce the risk of rising inflationary expectations” in the medium term, the Bank announced on Wednesday.
Prices of certain food products, non-alcoholic beverages and transport decreased month-on-month in Georgia in April, while prices of clothing, footwear and health-related costs increased, the latest inflation data published by the National Statistics Office of Georgia on Wednesday showed.
The National Bank of Georgia on Wednesday said even though inflation was “still high” in the country, the trends were following a “downward trajectory”, with the numbers expected to remain below the “target level” in the second half of the year.
Costs of healthcare and transport across Georgia decreased in September and rose for housing, water, electricity, gas and various goods and services, the latest inflation data published by the National Statistics Office of Georgia on Tuesday shows.
The National Bank of Georgia on Wednesday said the consumer price index across the country increased in September by 0.6 percent compared to the previous month, while the annual inflation rate amounted to 0.7 percent, adding that total inflation would remain “significantly lower” than the three percent target rate in October.