The National Bank of Georgia (NBG) must make another decision on the monetary policy rate on December 21. The NBG Governor Koba Gvenetadze declares that reducing the refinancing rate is not considered, on the contrary, it is not excluded that the National Bank may even increase it.
According to Koba Gvenetadze, the strengthened exchange rate of GEL has a positive effect on reducing inflation.
"We don't announce decisions in advance and we can't announce them either, because the meeting must be held first, so I will refrain. All I can say is that the risks are still high. At least I can say that the rate will not be reduced at tomorrow's monetary policy meeting. Whether there will be tightening or not, we have to discuss it in detail. There are factors that indicate that inflation should decrease. As you know, the exchange rate is quite stable over a long period of time. At the same time, the prices of various goods are falling globally. Shipping cost is also reduced. All this indicates that inflation should decrease. However, the country maintains a higher than potential economic activity, which slows down the reduction of inflation, therefore we should be ready to tighten the rate, if necessary, both with the refinancing rate and with other macro-prudential measures. The forecast is valid, somewhere in the second half of the year the annual inflation should be close to the target," said NBG Governor Koba Gvenetadze.
The refinancing rate in Georgia has been 11% since March 30. According to the forecast of the National Bank of Georgia, the refinancing rate will decrease by 1.4 percentage points in 2023, and the annual average inflation will be 5.3%.
