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National Bank Raised the Refinancing Rate by 50 Basis Points to 7.5%

The National Bank of Georgia (NBG) increased  the refinancing rate to 7.5%. According to the NBG, the central bank’s monetary policy committee decided to raise the refinancing rate by 50 basis points and  monetary policy rate amounts to 7.5%.

It also reported that a decision on monetary policy is based on the macroeconomic forecast, according to which, the National Bank continues to tighten monetary policy in response to increased inflation expectations.

Next changes in monetary policy will depend on the forward-looking inflation indicators, factors influencing them, and the situation in the economy as a whole.

According to the current forecast, at the beginning of 2016 inflation will remain above the target rate of the National Bank, and then will start to decline while in the second half of 2016 will  reach the 5% target. In September, the annual growth of consumer prices was 5.8%. The  inflation is determined by such  factors as appreciation of the intermediate costs of production due to the depreciation of the national currency and increased prices for some imported goods. one-time increase in  electricity price also had a significant impact on the inflation rate,” the National Bank’s  statement says. It is also mentioned  that in the third quarter GDP growth was in line with expectations. According to preliminary data, since the beginning of the year the real economy grew by 2.7%.

The next meeting of the Monetary Policy Committee will be held on December 16, 2015.