The monetary policy rate is not very low despite the reduction, - the National Bank Acting Governor stated this in response to the journalists' question, which was related to the decision of the NBG to reduce the refinancing rate by 0.75 pp to 8.25%.
Natia Turnava explained the reasons that allowed the NBG to take bolder steps.
"The National Bank of Georgia continues to be consistent in the implementation of monetary policy. We are gradually reducing the refinancing rate starting from May 2023. At first, we started with a slower pace. However, we have seen that inflation has been below 1% m-o-m for almost 10 months. Inflationary expectations have normalized. So we have picked up the pace a little bit.
One of the reasons is that transportation prices did not continue to grow in Georgia due to the current events in the Red Sea. In addition, our domestic inflation rate was lower in February compared to January. It can be said that we maintain a moderately strict policy," said Turnava.
It is difficult for the acting governor of the NBG to make a forecast, but she predicts, that all other things being equal, the refinancing rate will continue to decline.
According to the decision of the Monetary Policy Committee of the National Bank, the refinancing rate was reduced by 0.75 percentage points to 8.25%. This is the lowest rate of refinancing since February 2021.
