Otar Nadaraia, the chief economist of "TBC Capital" declares, that the macroeconomic environment provides an opportunity to soften the monetary policy.
As Nadaraia told BMG, as a result of the decrease in the refinancing rate, it is expected to encourage GEL loans, but he notes that consumers should not make a decision based on the interest rate alone.
"Refinancing rate reduction will encourage GEL loans, but as always, our advice is not to make a decision based only on the interest rate and to take into account the currency of our income, predictions on the exchange rate, as well as alternative scenarios. It often remains out of sight that more than half of the increase in the price of an apartment in USD comes from the GEL exchange rate," Nadaraia says.
As for the expectations, according to Otar Nadaraia, the refinancing rate will be close to 8% late this year, since such a drastic reduction is less expected at the next meetings of the Monetary Policy Committee.
On March 13, 2024, the Monetary Policy Committee of the National Bank of Georgia decided to reduce the Monetary Policy Rate (refinancing rate) by 0.75 percentage points. The policy rate now stands at 8.25%.
