Governor of the National Bank of Georgia, Koba Gvenetadze, has presented the 2021 NBG Report at the meeting of the Finance and Budget Committee of the Parliament. He drew attention to the factors that caused the increase in inflation and spoke in detail about all the steps taken by the National Bank in this direction.
"The main function of central banks is to properly manage inflation expectations so that pressures from the supply side do not prevent inflation from returning to the target level in the medium term.
That is why global central banks refrained from tightening monetary policy in 2021, although the National Bank of Georgia warned of the increase in inflationary expectations. Namley, in 2021, the National Bank gradually increased the monetary policy rate from 8.0% to 10.5%.
I would like to emphasize once again the fact that the National Bank sometimes makes unpopular, painful, but necessary decisions, and each of its decisions is optimal, to maintain price stability with the least expenditures. This is what the focus on the medium term serves. As explained in the organic law on the National Bank, the monetary policy committee's decision on monetary policy should be based on maintaining the target inflation rate in the medium term, and it should not be decisive to reach such short-term goals that may have a negative impact on price stability in the medium term", Koba Gvenetadze said.
