Georgian Central Bank Keeps Key Rate at 8%

The National Bank of Georgia (NBG) kept the key refinancing rate at 8% for the third time after reducing it to 8% in August.

NBG’s Monetary Policy Committee stated that a tight policy may be necessary to last for longer period, due to inflation expectations and the dynamics of economic activity.

Noting that although annual inflation, driven by weak demand, has remained close to the target level of 3% in recent months, the Committee said it also reckoned the COVID-19 pandemic-related social and economic support, high dollarization of the economy, as well as an increase in production costs and uncertainties regarding the prolonged restrictions.

Noting that the room for easing monetary policy is limited, the National Bank added that the Committee does not rule out the need for increasing the interest rate in the future.

The Monetary Policy Committee convenes again on February 3.

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