Georgia expects slower monetary policy normalization pace – TBC Capital

Georgia Materials 29 November 2021 15:51 (UTC +04:00)
Georgia expects slower monetary policy normalization pace – TBC Capital

BAKU, Azerbaijan, Nov. 29

By Maryana Akhmedova – Trend:

National currency rates in Georgia normalized in October 2021, after increasing, which was mainly due to the expectation of further depreciation after recent municipal elections, Trend reports via weekly economic review of TBC Capital.

According to the report, preliminary data for November indicates the transfer of deposits to Georgian lari, which is an argument for further reduction of savings rates in the national currency.

At the same time, the yield curve of the Georgian lari reflects the expectations of market participants regarding monetary policy easing in the future, TBC Capital said.

On the other hand, while the decrease in oil prices on the international market is meant to ease inflationary pressures, however, because of the growing uncertainty surrounding the spread of the new COVID-19 strain, this is an argument for a slower pace of monetary policy normalization in Georgia.

Overall, TBC Capital believes that more information is needed to materially review the 2022 growth and monetary policy rate scenario.

Meanwhile, foreign currency interest rates, along with Georgian lari, have also fallen. Even if the US Federal Reserve begins to tighten in June 2022, TBC Capital still thinks that low exchange rates in Georgia will continue for a long time.


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