The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on February 3, 2016 decided not to change the current refinancing rate at eight percent.
The monetary policy decision is based on the macroeconomic forecast, which indicates a sharp increase in the inflation expectations given the Lari depreciation against the USD, which raises the future risks as a result of a one-time deviation from the inflation target.
In 2015 the NBG tightened the country’s monetary policy several times in response to increased inflation expectations.
Monetary Committee of NBG adopted the decision, after several hours of discussion on Wednesday, at the base of estimation of economic environment and inflation expectations.
According to the new forecast of the bank, the inflation will exceed 5% early in 2016, while later it will be below 5%, but the rate should still remain within the frame of targeted index.
The Committee notes, that inflation growth in January (5,6%) is restricted by the weak joint demand and reduced prices on oil and food staff at the world market.
The central bank underlines afresh, that “external sector still remains the main obstacle. Hard economic environment has a negative impact on the revenues gained from commodity and service export”.
To remind, NBG started strengthening of monetary policy from February, 2015 and the rate was increased from 4% to 8% by the end of the year.
It should be noted, that annual inflation rate totals to 5,6% in January.