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National Bank of Georgia leaves refinancing rate unchanged

By Tatia Megeneishvili
Thursday, February 4
The National Bank of Georgia (NBG) has left its monetary policy rate unchanged. Accordingly, the refinancing rate tied to the interest rates of mortgage and business loans will not increase.

According to the NBG, its monetary policy committee made the decision to keep the refinancing rate unchanged on February 3. The monetary policy rate was - and still is - 8.0 %.

As the NBG explained, monetary policy decisions are based on macroeconomic forecasts. According to the National Bank, tightening the monetary policy in 2015 had a positive impact on inflationary expectations decrease.

According to the NBG’s forecast, the GEL inflation is expected to be 5 % in early 2016; however, it will apparently later drop will by a 5 %.

According to the NBG, real GDP growth is projected within appropriate expectations. According to preliminary estimates, real economic growth in 2015 was 2.8 %.

"The foreign sector continues to be the main stumbling block of economic growth. The current difficult economic situation in the region negatively effects the export earnings of goods and services. Accordingly, the present data reflects the impact of shocks on the exchange rate over the last year; however, no further shocks of this kind are expected,” reads the statement.

"At this stage, if additional shocks will not be identified, inflation expectations restraining policy will need no further tightening. As a result, based on foreign risks and domestic factors, the Monetary Policy Committee considered leaving the policy rate unchanged at 8.0,” reads the statement.

According to the NBG, the National Bank will continue to monitor developments in the economy and financial markets and will use all means at its disposal to ensure price stability.

The next meeting of the Monetary Policy Committee will be held on March 9, 2016.