We will have to keep tightened monetary policy rates. Moreover, we may have to tighten it further, - Archil Mestvirishvili, Vice President of the NBG stated it at the sitting of the Budget and Finance Committee.
According to him, the biggest challenge in terms of monetary policy is high inflation, which is due to the external factors.
"There is a challenge of high inflation worldwide, which is transmitted to the local inflation. If aggregate demand was aimed at reducing inflation in previous periods, in 2021, aggregate demand does not reduce existing inflation any longer due to the increased economic activity. Accordingly, the National Bank's response is to tighten monetary policy.
With today’s forecast, we will have to maintain a tighter monetary policy. We may have to tighten it even more. The forecast is that from the second half of next year we will slowly begin to emerge from a tighter monetary policy. We will still maintain the tightened policy, although we will gradually reduce interest rates”, Mestvirishvili said.
The NBG left the monetary policy rate unchanged at 10% on September 15. The next meeting will be held on October 27.
