BAKU, Azerbaijan, Feb. 2
By Maryana Akhmedova – Trend:
The Monetary Policy Committee of the National Bank of Georgia (NBG) kept the refinancing rate unchanged at 10.5 percent on February 2, 2022, Trend reports via the press service of the NBG.
According to the regulator, the reason for maintaining the monetary policy rate is high inflation in the country.
“The COVID-19 pandemic has led to many uncertainties in the world economy, which have emerged in stages and challenged policymakers. One of them is the most important high inflation environment, which is especially relevant for Georgia - in December, the annual inflation rate increased to 13.9 percent,” the NBG said in a statement.
The main reason for this increase compared to the previous month was the base effect of the 2020 subsidy on utility bills, which will be temporarily maintained in January-February 2022, the NBG noted.
“Overall, high inflation since the first half of 2021 has been driven by rising international prices for food, oil and transportation. Consequently, high inflation is largely due to the imported goods, which is a reflection of the increase in prices in US dollars in international markets,” the statement said.
The recent strengthening of the nominal effective Georgian lari exchange rate has somewhat eased the pressure from international markets. However, both core and monthly inflation in recent months have shown early signs of stabilization.
According to the current forecast of the NBG, inflation will start to decline gradually from spring 2022, and will reach the target by the end of the year.
"Tighter monetary policy, combined with temporary factors and fiscal consolidation, will help reduce inflation," the NBG said in a statement.
Meanwhile, the monetary policy rate in Georgia increased by 0.5 percent on December 8, 2021, resulting in more expensive loans for 169,700 people.
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