Just because inflation is much higher than inflation target does not mean that inflation targeting "does not work, - Koba Gvenetadze, Governor of the National Bank of Georgia at the meeting of the National Bank of Georgia and the World Bank.
According to him, no matter how undesirable high inflation may be this year, it is caused by the pandemic and this is a critical issue in developed countries as well.
“Georgia, as a country with a small open economy, has to deal with many challenges simultaneously, which ultimately affect prices. Just because inflation is much higher than inflation target does not mean that inflation targeting "does not work." It should be understood that inflation target is a nominal anchor in monetary policy decisions. Moreover, low target inflation is even more important today, as it is the factor that pushes the National Bank to tighten monetary policy in the period of high inflation, which it does. This, in turn, will inevitably help the inflation, which is now high because of one-off factors, go down again over time," – Koba Gvenetadze said.
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