The Monetary Policy Committee of the National Bank of Georgia (NBG) kept the key refinancing rate at 9.5% on June 23.
The Monetary Policy Committee said that annual inflation stood at 7.7% in May. It is expected to peak in June, while in 2021, other things being equal, it will average 7%.
The central bank noted that the contribution from imported and food prices to the inflation rate is still high due to rising prices on international agricultural markets and the exchange rate depreciation in previous periods. At the same time, rising global oil prices are pushing fuel prices higher and, consequently, increasing their contribution to inflation, the NBG said.
“The base effect of the previous utility fees’ subsidy will temporarily increase the annual inflation in December 2021 and January-February 2022,” the NBG said, adding that by maintaining tight monetary policy for a prolonged period, inflation will gradually return to its target (3%) in 2022.
The Monetary Policy Committee will convene again on August 4, 2021.