On October 23, the Monetary Policy Committee of the National Bank of Georgia (NBG) decided to keep the key refinancing rate unchanged at 8%.
The NBG notes that inflation has remained below the 3% target since the beginning of the year. In September, the annual price level rose by 0.6%, with core inflation at 0.8%. The National Bank emphasizes that its monetary policy, with its timely tightening and gradual normalization, has helped to stabilize long-term inflation expectations, especially for domestically produced goods. Increased competition and lower corporate margins also contributed to low inflation. The NBG also notes that economic growth, forecast at 8.5% for 2023, has increased the economy’s production potential, thereby easing price pressures. The National Bank expects inflation to average 1.2% in 2024 and to stabilize at around 3% in the medium term.
The National Bank of Georgia highlights increased local and global uncertainties, which pose risks and put pressure on prices despite positive trends. Oil and food price volatility, as well as higher transportation costs due to the events in the Red Sea, add to inflationary risks. Strong domestic economic activity could also push up prices. As a result, the NBG maintains its policy rate at 8.0 percent, adopting a prudent stance to keep inflation close to its target. Depending on inflation risks, the policy rate may be gradually reduced or tightened if necessary.
The next meeting of the Monetary Policy Committee will be held on December 18.
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