The excessive response of the National Bank on the inflation caused by single factors is considered as wrong.
The Vice President of the NBG talked about inflation, causing reasons and correct reaction to the publication “Kviris Palitra”.
“If we tie up inflation excessively, we will grow unemployment and import, while reduce local production, which will create more problems in the future”, – said Archil Mestvirishvili and noted the importance of price stability in the medium term for economy.
“Expenditure reduction by tying up revenues will not be a correct decision. Price increase, in this particular case, is caused by single factors and the excessive reaction of the National Bank is wrong. The excise and petrol price increase on the world market has led to a temporary deviation from the inflation rate, but this has not caused inflationary processes, i.e. the NBG reacts to the inflationary processes and it is our duty not to allow these processes as well as to avoid deflationary processes. Therefore, inflation is close to 4% in the medium term period and close to 3% from the next year”, – Vice-President of NBG says.
To remind, annual inflation rate rose to 7.1% in June. The NBG previously has stated that inflation is expected to remain above target level by 2017, that is why the refinancing rate is 7%.