Inflation in Georgia to remain below 3% due to “tight monetary policy” - central bank

The National Bank of Georgia on Wednesday said the inflation rate would remain below 3 percent throughout the rest of the year in the country, stabilise around the number in the following year.

The NBG said headline inflation stood at 0.7 percent, while core inflation was 2.5 percent in September due to the “tight monetary policy”, while also noting the weakening of the price pressures stemming from the Covid-19 pandemic and the ongoing Russia-Ukraine war.

It also said the “additional uncertainty” was created around the inflation forecast, caused by  the “acute geopolitical situation” due to the ongoing conflict in the Middle East, as well as the “partially worsened trends” both in price and supply volatility on the fuel market.

The domestic economic activity was also “noteworthy”, it said, with increased credit growth influenced by increased business loans, while a “strong aggregate demand” caused by the acceleration of credit activity containing “additional inflationary risks”.

The NBG also announced it remained “focused” on keeping inflation low, with the Monetary Policy Committee of the Bank on Wednesday deciding to keep the policy rate unchanged at 10 percent. The body said it would continue to normalise the rate “only at a moderate pace”.