The Governor of the National Bank of Georgia (NBG) says the future dynamics of inflation are of particular importance for the monetary policy of the National Bank.
According to him, inflation has been exceeding its target rate for quite a long time, the risks of increasing inflationary expectations still remain.
According to Koba Gvenetadze, we should expect inflation to return to the target rate in the second half of the next year.
"According to the current basic macroeconomic forecast, inflation in 2022 will be within 11.9% on average, while in 2023, it will be within 5.3%, and other things being equal, it will return to the target rate in the second half of the next year. Deviation from the target rate of inflation is caused by increased short-term expectations and still high prices of commodity raw materials on international markets. Against the backdrop of their decrease and strengthened exchange rate, the mentioned deviation will be eliminated in the medium term", said Koba Gvenetadze.
According to the NBG Governor, despite the stabilization and positive trend of prices on the international markets in recent months, the prices of food products and oil are still high, against the background of which global inflation has increased and there is a need for a sharp and synchronized tightening of monetary policy by central banks.
"In particular, the US Federal Reserve raised the federal funds rate to 4% in November, and the European Central Bank increased the policy rate to 2% in October. And in terms of inflation, consumer prices in the USA increased by 7.1% annually in November, and in the Eurozone - by 10.0%," said Koba Gvenetadze.
