Georgian National Bank reduces monetary policy rate to 4 per cent
Georgia, Tbilisi, June 20 / Trend N. Kirtzkhalia /
The Georgian National Bank reduced the refinancing rate by 25 basis points to four per cent.
The Georgian National Bank told Trend that the Monetary Policy Committee made a decision because of the unchanged low inflation forecast until the end of the year.
The country's inflation rate hit 0.7 per cent in May. The annual deflation was 0.1 per cent. This was caused by a decrease in the electricity tariff (10 per cent) and the seasonal decline in prices on vegetables and fruits.
According to the National Bank, the recent liberal measures including reducing interest rates and expanding the lease base, have led to increased banking activities and reduced interest rates on loans.
"At present, there is a large amount of liquid resources and capital in the Georgian banking system," the national bank said. "In the case of an increased demand for loans, this will dramatically boost the lending activity in the country."
According to the report, the low inflation level compared to the forecast allows the National Bank to continue its policy of weakening and reducing the monetary policy rate.
The next meeting of the Monetary Policy Committee of the National Bank will be held on August 14.