On August 5, the National Bank of Georgia (NBG) reduced the key refinancing rate by 0.25% points to 8%.
The Monetary Policy Committee of NBG lowered the lending rate while the Bank saw the annual inflation reach 5.7%, with prices falling by 0.5% on a monthly basis in July.
The NBG continues gradual exit from the tightened policy as it forecasts inflation to continue declining over the rest of the year, reaching the target level in the first half of 2021.
The National Bank also stated that its revised forecast expects Georgia’s COVID-hit economy to shrink by 5%, exerting downward pressure on inflation. Revenues from tourism declined by 97% year-on-year in June, while the demand for exports and imports fell by 14% and 22% year-on-year in June, respectively.
The NBG pledged to “use all instruments at its disposal to ensure price stability.”
The Monetary Committee of the Central Bank is expected to convene again on September 16.
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