Georgia, Tbilisi, Dec.23 / Trend, N.Kirtskhalia /
The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) held a meeting on Dec. 22 and decided to keep its Main Policy Rate (the refinancing rate) unchanged at 7.5 percent. Annual inflation reached 10.5 percent in November in Georgia.
The contribution of food in total CPI was around 9.1 percentage points. Annual price increase for services is 0.6%, which indicates the low inflationary pressure from the demand side.
The annual growth rate of monetary aggregates has recently shown the tendency to decline. It is expected that by the end of the year the annual growth rate of broad money will decrease even more. he bank loans extended to the economy continues to increase. In the recent period the foreign exchange loans have particularly grown.
The National Bank continues monetary policy tightening. To this end it was decided to increase the reserve requirements for foreign exchange liabilities gradually up to 15%. The first stage involves the increase of the ratio to 10% by Jan. 20, 2011.
In order to support the development of the money market the National Bank will decrease the interest rate corridor from 4 to 3 percentage points. This step will promote further decrease of the interbank interest rate volatility and deepening of money market.
The NBG will closely monitor developments in the economy and financial markets and will in due course act accordingly.
The next meeting of the Monetary Policy Committee will be held on Jan. 18, 2011.