22.Nov .2019 16:12

The NBG hiked further as the GEL stays undervalued

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According to TBC Research, the MPC expects the inflation to start to decline from March 2020 and to stay close to the target in the medium term.

The NBG has continued its tightening cycle and increased the policy rate by 100 basis points to 8.5% at its MPC meeting held in October.

The tightening came in line with the expectations as the GEL effective exchange rate stayed at approximately the same level. Though the rate hike was sharper than projected, no other tools were deployed this time. Per our judgement, the NBG will continue to tighten in GEL and may relax further in FX unless the GEL strengthens.