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National Bank of Georgia Keeps Key Interest Rate at 7 pct

National Bank of Georgia said it kept its key interest rate unchanged at 7 percent on Wednesday, based on forecasts showing annual inflation exceeding its target of 4 percent this year.

Consumer prices were up 7.1 percent in annual terms in June, 0.4 percent lower from the previous month.

“Rising inflation, which is in line with a current forecast, will remain above the target this year,” the central bank said in a statement.

“We expect that inflation will start to decline in the second half of this year and will get back to the target level in 2018.”

After cutting the key rate several times last year, the central bank raised it to 6.75 percent from 6.5 percent in January, left it unchanged in March, raised it to 7 percent in May and kept unchanged in June. The bank holds its next policy meeting on Sept 6.

The central bank’s expectations for rising inflation reflect supply side pressures, price rises for some goods on overseas markets and higher taxes, particularly excise duties on tobacco, cars and oil products imposed from Jan.