NBG Reduces Key Refinancing Rate from 9% to 8.25%
On March 13, the Monetary Policy Committee of the National Bank of Georgia (NBG) reduced the key refinancing rate by 0.75 percentage points to 8.25%.
Inflation remains low in Georgia. In February, headline inflation increased by 0.3% annually, while core inflation was 2.4%. According to the NBG, Georgia’s low inflation is the result of tight monetary policy and lower inflation expectations, as well as a significant decline in external shocks, such as those caused by the war and the pandemic. The central bank notes the lowered inflation forecast, stating that, all else equal, inflation will remain below the 3% target in early 2024 and stabilize around it in the medium term.
The NBG says that inflation risks remain, but their severity has diminished. It notes that the biggest risk to inflation now is that international transportation costs may increase due to the tensions in the Red Sea. In addition, the bank notes that in January, according to preliminary estimates, economic growth amounted to 5.8%, which indicates the neutralization of inflationary pressures from the demand side. According to the NBG’s forecast, the lag in economic activity from the pre-pandemic trend has been completely eliminated and it is expected that economic growth will stabilize around its potential level in 2024.
In view of the positive trends, the NBG decided to slowly withdraw its tight monetary policy stance and lowered the key interest rate by 0.75 percentage points to 8.25 percent. However, “if factors amplifying inflation expectations become apparent, the NBG will maintain a tight monetary policy stance for a longer period or further tighten its policy,” – the NGB notes.
The next meeting of the Monetary Policy Committee will be held on May 8.
Also Read:
- 31/01/2024 – NBG Reduces Key Refinancing Rate from 9.5% to 9%
- 20/12/2023 – NBG Reduces Key Refinancing Rate from 10% to 9.5%
- 25/10/2023 – NBG Keeps Key Refinancing Rate Unchanged at 10%
- 13/09/2023 – NBG Reduces Key Refinancing Rate from 10.25% to 10%
This post is also available in: ქართული (Georgian) Русский (Russian)
