PM Hails National Bank’s Record on Inflation

Prime Minister Lado Gurgenidze said inflation was 10.7% in January, which although “unacceptably high” constituted “a positive trend” as the rate had gradually decreased from 11.3% in November. 

“Of course this is high, but look at the trend – 11.3% [in November]; 11% [in December] and 10.7% [in January] – and do you know why [the rate is decreasing]? Because the government and the National Bank are working in close cooperation like never before,” PM Gurgenidze said. “Davit Amaglobeli [the acting president of the National Bank] and his team have undertaken extremely courageous steps and have increased three times in the last three months interest rates. They are desperately fighting inflation.”

The National Bank raised its key interest rate to 11% on February 20, saying that high global commodity prices pose a risk of higher inflation. The one-week certificate of deposit rate was increased from 10%.

He said that the government’s target was an 8% inflation rate at most. “But it [this target] requires time and the approval of the government-proposed economic package by Parliament,” PM Gurgenidze said.

He added that the economic package, which is currently under consideration by Parliament, will give the National Bank more levers to fight inflation.

The package, among other things, includes a proposal to increase the National Bank’s accountability in respect of monetary policy.  If annual inflation reaches 12%, the president of the National Bank will have to resign.