National Bank Increases Refinancing Rate to 7%

The Monetary Policy Committee of the National Bank of Georgia has decided to increase the refinancing rate by 0.5% points, from 6.5 to 7%.

The National Bank reports that the annual inflation was 4.9% in August and the influence increased the depreciation of  theeffective nominal exchange rate.

“As was noted in the decision of the last session of the Monetary Policy Committee, if the exchange rate pressures contined to affect inflation, the National Bank would toughen the monetary policy. Accordingly, the Monetary Policy Committee of the National Bank of Georgia decided to increase the refinancing rate by 0.5% points, i.e. from 6.5 to 7%. Additionally, the Committee expresses readiness to continue tightening the monetary policy until the pressure is reduced. The National Bank of Georgia will continue to monitor current economic processes and financial markets and will use all available leverages to ensure stability in prices”, reads the NBG announcement.  

The next sitting of the Monetary Policy Committee is scheduled for October 23, 2019. However, if necessary, the Committee will also consider holding an extraordinary session.

Head of the National Bank Koba Gvenetadze said on July 30 that external factors and fewer tourists have made an impact on the exchange rate of the national currency.

"We have received fewer tourists than we expected this year, which, of course, had an influence on the rate of the national currency,” Gvenetadze said.

On August 1, The National Bank of Georgia announced it had sold USD 32,800.000 at the Foreign Exchange Auction due to the devaluation of the national currency, Lari. 

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By Ana Dumbadze