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George Kvirikashvili Considers a Refinancing Rate Increase an Adequate Solution

Minister of Economy and Sustainable Development, Vice-Prime Minister Giorgi

Kvirikashvili considers  the National Bank’s decision on refinancing rate  increase in the current situation an adequate solution.
Kvirikashvili assessed the central bank’s yesterday decisions at the Cabinet meeting  and noted that the economic team was informed about this.

“As you know, the National Bank has the exclusive right to carry out monetary policy using  its instruments. The National Bank has the operational information on the situation in the foreign exchange market and based on this  makes decisions. We previously had a discussion and information that it will use the tools if needed . I think, we are not able to  assess this  either positively or negatively due to the fact that it owns  specific information. As for a slight  change in the refinancing rate,  I think that this is an adequate step in this situation. This led to somewhat stabilization in the foreign exchange market and  was  reflected in the exchange rate “, – Kvirikashvili notes.

According to the National Bank of Georgia (NBG), monetary policy has been tightened due to the macroeconomic forecast of the risks because of external factors.

In order to neutralize inflation, the National Bank has decided on a phased exit from loose monetary policy, but despite this, the refinancing rate remains below the neutral indicator. Based on current projections, if not additional factors exerting inflationary pressures, the rate for 2015 will be within 5%.