Natia Turnava, the Acting Governor of the National Bank of Georgia, on Thursday, said the domestic inflation had remained below the target rate over the last 20 months, with the “optimal” inflation target for the country’s development currently set at 3%.
Speaking at the Budget and Finance Committee of the country’s Parliament, Turnava emphasised the importance of the central bank’s monetary policy, which she said employed an inflation targeting regime designed to maintain price stability. She noted this approach involved establishing an inflation target in advance and managing economic policies to keep inflation close to the goal in the medium term.
“Consistent adjustments in monetary policy - both in terms of tightening and normalisation - along with effective transmission mechanisms in the economy within our existing framework, have resulted in a successful stabilisation of prices”, Turnava said.
"Despite facing strong external economic shocks in recent years, we have managed to keep inflation below our target rate. Since the beginning of 2023, we have seen a downward trend in inflation, maintaining levels below the target for 20 consecutive months. As of November 2024, inflation stood at just 1.3 percent”, the Acting Governor added.
As a response to a declining inflation rate, Turnava said the National Bank began gradually reducing the monetary policy rate in May 2023, cutting it by a total of three percentage points to reach eight percent as of November 2024.
“Based on the latest basic macroeconomic forecast, we anticipate that inflation this year will average around 1.2 percent. In the medium term, we expect it to stabilise around our target rate”, she said.
