TBC Capital published Update From The Chief Economist. According to the report, the NBG has continued to accumulate reserves with an additional up to 100 million USD net USD buying in December – the strong trend over the last months likely continuing in January as well.
As of the document, among other drivers, higher central international reserves was a reason Fitch improving the outlook from stable to positive.
"Based on the January sectoral turnovers, the growth momentum looks to hold in the beginning of this year as well. Once again, this may indicate some delayed GEL rate cuts than previously envisaged, however, we still expect inflation to moderate further with around 9% YoY estimate in January down from 9.8% a month earlier implying below target MoM headline CPI print in the second month in a row. At the same time, even if this outlook holds, much would depend on the dynamics in other than headline measures of inflation. Therefore, we would still bet on the first rate cut later in March, though with still a considerable probability the easing to take place already this week at the Wednesday monetary policy committee meeting", - the report reads.
