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Central Bank Holds Key Rate at 10.5%

The Monetary Policy Committee of the National Bank of Georgia (NBG) today held the key refinancing rate unchanged at 10.5%, after tightening its stance to a 13-year highest in December.

The policy-setting committee decided to maintain its tight monetary stance to prevent long-term inflation expectations amid “strong” supply shocks and the current high rate of inflation in Georgia. 

The Central Bank also said that risks were also apparent in terms of both geopolitical tensions and the tightening of global financial conditions.

Noting that annual inflation hit 13.9% in December, the NBG stressed the increased consumer prices over the second half of 2021 stemmed from globally rising prices for food, oil and shipping. This resulted in higher prices for imported goods, the central bank explained.

But the NBG added it expects the inflation to gradually decline from spring 2022 and approach Georgia’s target of 3% by the end of the year.

As for the recovery from the pandemic-related economic downturn, the central bank argued that the 10.6% growth in Georgia’s real GDP in 2021 was a result of pent-up aggregate demand, continued high credit activity and the Government’s fiscal stimulus.

Also, the NBG projected Georgia’s economy to grow by 5% in 2022.

The central bank in its statement also highlighted positive trends in terms of foreign demand, pointing at a 29% in Georgia’s exports and some nine-fold spike in revenues from international travelers in December 2021.

The Monetary Policy Committee will convene next on March 30, 2022.

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This post is also available in: ქართული (Georgian) Русский (Russian)


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