Georgian Central Bank Keeps Key Rate at 8%

The National Bank of Georgia (NBG) on February 3 kept the key refinancing rate at 8% for the fourth consecutive time, citing uncertainties in global economic recovery and the growth rate of local lending.

The NBG’s policy-setting committee said the need for maintaining a tight monetary stance “was apparent,” adding that it does not rule out a future increase in the refinancing rate either.

The Monetary Policy Committee argued that the decreased 2.8% annual inflation rate in January is only temporary, related to government subsidies on utility tariffs.

Meanwhile, the Committee said, a significant increase in prices in the international commodity markets, depreciated national currency, and COVID-19 pandemic-related rising production costs are some key factors pressuring inflation upward.

The NBG said it forecasts inflation will remain on average at 4% in 2021 and then gradually approach the targetted rate of 3%. It added that economic growth is also expected to be at around 4%, mostly driven by domestic demand.

The Monetary Policy Committee convenes again on March 17.

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