Central Bank Increases Key Rate to 7.5%

The Monetary Policy Committee of the National Bank of Georgia (NBG) decided at its special meeting on September 25 to raise its key refinancing rate by 0.5 percentage points to 7.5%.

The National Bank of Georgia started tightening its monetary policy from September 4, pushing the key refinancing rate from 6.5% to 7%. The bank then explained that the decision was driven by “inflationary pressure” from the GEL exchange rate depreciation, and noted that the Monetary Policy Committee “stands ready to further continue policy tightening until the pressures from exchange rate recede.”

Following today’s session the NBG said that “the nominal effective exchange rate of the GEL has remained undervalued and inflationary expectations persist.” Therefore, the committee decided to raise its key refinancing rate.

“The NBG will continue to monitor the developments in the economy and financial markets and will use all means and instruments at its disposal to ensure the price stability,” the bank said in its statement.

The Monetary Policy Committee will hold its next meeting on October 23, 2019.

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