Central Bank Cuts Key Rate to 6%

National Bank of Georgia (NBG) reduced its main policy rate by 25 basis points to 6% on May 23.

Georgian’s inflation slipped to -2.1% year-on-year in April, a third consecutive month of annual deflation.

NBG’s monetary policy committee said in a statement on May 23, that annual inflation rate was expected to start “moderate increase” from June, but would still remain below government’s target level during this year, as well as during the beginning of next year. The government’s forecasted inflation rate for 2012 is set at 6%.

It said that Georgian currency, Lari, had appreciated because of inflow of foreign currency from tourism and foreign investments.

“The foreign remittances have increased as well,” NBG’s monetary policy committee said. “Increase in foreign currency inflows is not completely reflected in the economic growth, since these inflows are accompanied by the significant increase in imports.