The National Bank of Georgia (NBG) highlights the increase of inflationary risks in the recent period, which is related to the increased uncertainty in the background of internal and external challenges.
In the decision of the monetary policy committee of the NBG, it is mentioned that in the light of the devaluation of the national currency, the inflationary pressures from imported goods is noteworthy.
"Recently, heightened uncertainty due to internal and external challenges has increased inflationary risks. Against this backdrop, exchange rate volatility has become noteworthy as it creates inflationary pressures from imported goods. Despite recent declines in international oil prices, global food prices have risen steadily over the past two months. Furthermore, inflation expectations have increased in recent months. Additionally, domestic economic activity has outperformed previous projections, supported by robust credit growth.
Given the current analysis of domestic and external conditions the NBG has decided to maintain the policy rate at 8.00 percent. If no additional risks materialize, the NBG will cautiously continue policy rate reduction towards its neutral level. However, if risks amplifying inflation expectations become more pronounced, the NBG may need to maintain the current tight stance for a longer period or even tighten policy further" , - the central bank notes.
On June 19, 2024, the Monetary Policy Committee of the National Bank of Georgia (NBG) decided to keep the Monetary Policy Rate (the refinancing rate) unchanged. The policy rate stands at 8%.
