Central Bank Keeps Key Rate at 12%

National Bank of Georgia (NBG) kept its key certificate deposits rate at 12% and said on May 14 capital inflows had slowed down ahead of parliamentary elections.

“The capital inflows have slowed down somewhat in the pre-election period, however it is expected that inflows will return to pre-election levels and will likely remain high for the remainder of the year,” NBG said in a statement after meeting of its Monetary Policy Committee.

It also said that existing risks to inflation has not changed since the last Monetary Policy Committee meeting. The committee meets once in a month.

“Assuming that significant increases in administrative prices will not be observed and commodity prices will be in line with the existing forecasts, current interest rates will insure that an inflation rate of 8% is achieved by the end of the year,” it said.

Annual inflation rate as of end-March was 12.3%, according to NBG. Annual inflation rate was 10.7% in January and 10.9% in February.

Last month it increased its key interest rate from 11% to 12%.