Central Bank Holds Key Rate at 11%

The Monetary Policy Committee of the National Bank of Georgia (NBG) on February 1 kept the refinancing rate unchanged at 11%.

NBG says despite the fact that positive trends in international markets give grounds for cautious optimism, due to the current geopolitical situation, uncertainty is still high, and existing risks for inflation are mainly on the upside.

“Despite the slowdown, inflation is still above the target and amounted to 9.8 percent in December. As a result of consecutive shocks, inflation has deviated from its target level for a long period of time, reinforcing inflation expectations,” NBG added.

NBG plans to pursue a tight monetary policy in 2023 “in order to eliminate additional inflationary pressure and reduce the risk of rising inflationary expectations in the medium term.” “Monetary policy easing is expected only once actual inflation approaches the target, which should prevent a deterioration of long-term expectations,” the Central Bank said.

NBG believes it may be necessary to further tighten monetary policy or maintain the current tight stance for a longer period if an upside pressure on inflation expectations becomes considerable again.

The next meeting of the Monetary Policy Committee will be held on March 29, 2023.

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


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