National Bank Raises Monetary Policy Rate by 1% to 8.5%
The National Bank of Georgia (NBG) has raised the monetary policy rate by 1% to 8.5%, the NBG press-release reads.
The NBG monetary policy committee raised the refinancing rate by 1% to 8.5% at the October 23 meeting.
The September inflation rate made up 6.4%. The higher inflation is preconditioned by transmission of nominal efficient exchange rate to the devaluation. According to the forecast, in other equal conditions, the inflation rate will be higher than the target rate. The rate will start declining in March 2020 and get closer to the target indicator in midterm period.
Starting September 2019 the NBG commenced raising the refinancing rate with the aim to neutralize inflation pressure from the exchange rate depreciation.
According to early reports, the third quarter is expected to record a improving current account balance. Positive external trends will be also maintained. Tighter monetary policy will strengthen the exchange rate and in midterm period the higher rate will ensure desirable dynamic of inflation.
The NBG will supervise the ongoing economic developments, financial markets and use all instruments to ensure stability of prices.
The next meeting of the monetary policy committee will be held on December 11, 2019.