BAKU, Azerbaijan, Dec.9
By Tamilla Mammadova – Trend:
As part of COVID-19-related measures, the European Central Bank (ECB) and the National Bank of Georgia (NBG) agreed to launch a 100 million euro repo line to support liquidity, Trend reports via the NBG.
This line was introduced under the framework of the Eurosystem repo facility for central banks (EUREP).
According to the National Bank of Georgia, the purpose of the instrument is to supply euro liquidity to Georgia's financial system in case of need. The mechanism will be in force until June 30, 2021, and its operational support will be provided by the German Bundesbank.
The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on December 9, 2020, and decided to keep the refinancing rate unchanged at 8 percent.
"Annual inflation has been at 3.8 percent in recent months. According to the current forecast, other things equal, the inflation rate will hover close to the target level in the first half of 2021. Inflation dynamics are mainly determined by weak aggregate demand and this impact is expected to persist next year as well. Still, the effect on aggregate demand coming from increased pandemic-related social and economic support fiscal measures of 2020-2021 is noteworthy," the report said.
The Monetary Policy Committee also took into account the supply-side factors, such as the increase in production costs due to additional restrictions in the wake of the pandemic. The Committee also took note of the uncertainties surrounding the prolonged pandemic and the global restrictions.
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