Galt&Taggart Sees The Need To Further Reduce The Refinancing Rate
Galt&Taggart economist Lasha Kavtaradze deeply believes that there is a need for further reduction of the monetary policy rate. He spoke about this while visiting TV-program "Business Morning".
"At this stage, the local inflation rate remains high, although the dynamics of reduction are noticeable as well. According to our forecast, the process of disinflation will continue in the following months and we expect 1% inflation late this year, and the average annual inflation is expected at the level of 3.1% in 2023. Therefore, our assessment and recommendation are that the NBG, which began easing the monetary policy in May, should preferably continue in June, and in the following months it should be observed how things will develop. We think that by the end of the year, the NBG will have the opportunity to reduce the monetary policy rate by an additional 100-150 basis points," Kavtaradze said.
On May 10, 2023, the Monetary Policy Committee of the National Bank of Georgia (NBG) decided to decrease the monetary policy rate (the refinancing rate) by 0.5 percent. The monetary policy rate stands at 10.50 percent.
Inflation in Georgia is on a downward trajectory and in April the headline inflation dropped to 2.7 percent, while core inflation falling to 4.7 percent. Other things equal, in the short term the annual inflation rate is expected to decline further below the target and stabilize at around 3% in the medium term.
The next meeting of the Monetary Policy Committee will be held on June 21, 2023.