The Monetary Policy Committee of the National Bank of Georgia (NBG) today kept the refinancing rate unchanged after hiking it to a 14-year high at 11% back in March.
“Elevated inflation and inflationary risks remain a recent global challenge,” the central bank said in its decision to hold the rate tight.
The NBG noted that the war in Ukraine has created new risks, with the resulting sanctions imposed on Russia and supply-side disruptions having significantly increased the prices of several product categories on international markets.
Still, the central bank said that the recent appreciation of the Georgian national currency Lari has supported a decrease in imported inflation.
The NBG stated that it expects Russia’s war against Ukraine to slow down hopes for the consumer prices to decrease, as Georgian inflation continues to remain high at 12.8%.
The central bank reported that inflation is expected to remain high throughout the year, but should follow a decreasing path due to the tight monetary policy.
Noting that credit activity remains strong partly due to foreign currency loans, the NBG said it also may increase the FX reserve requirements -- currently at 25% -- for commercial banks.
Also, the NBG reported that foreign demand has still continued to recover in the first quarter of 2022, with profit from international travel increasing along with goods imports.
The central bank said it forecasts the economy to grow about 4.5% in 2022.
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