The National Bank of Georgia’s (NBG’) Monetary Policy Committee decided to keep the refinancing rate unchanged at 7.0%.
Explaining the decision made at the September 5 meeting, the bank noted that annual inflation has decreased since the beginning of this year, moving around the target rate of 3%. Inflation is expected to continue moving around 3% in the medium term.
“The macroeconomic risks have risen given the regional developments, causing increased volatility on financial markets,” the NBG added.
“However, even in case these risks are realised, the significant deviation of inflation from its target is not expected. According to the NBG estimates, there still is the necessity of gradual exit from tight monetary policy, although how this process will be carried out depends on the magnitude of external risks.”
The bank also observed “quite high” economic activity in the first half of the year, with the preliminary estimates putting GDP growth in January-July at 5.5%. Meanwhile, goods exports are growing strongly, tourist revenues shot up by 22% y/y in 7M18, and remittances expanded by a robust 18% in the same period.
At the same time, stronger domestic demand has led to a 23% increase in goods imports.
The Monetary Policy Committee is to hold its next meeting on October 24.