National Bank Increases Refinancing Rate to 7,5%

The Monetary Policy Committee of the National Bank of Georgia has decided to increase the refinancing rate by 0.5% points, from 7 to 7,5 %.

The NBG explains that the reasons behind such decision are inflation expectations as a result of the depreciation of the national currency – Lari (GEL).

"The nominal effective exchange rate of the GEL remained unchanged after the last meeting of the committee, with inflation expectations still in place. Therefore, at today's extraordinary meeting, the Monetary Policy Committee decided to increase the refinancing rate by 0.5 percentage points. The National Bank constantly monitors the information coming from the economic processes and financial markets and will use all the instruments at its disposal to ensure price stability,” note the representatives of the National Bank.

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

“As was noted in the decision of the last session of the Monetary Policy Committee, if the exchange rate pressures continued 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 7 to 7,5%. Additionally, the Committee expresses readiness to continue tightening the monetary policy until the pressure is reduced”, reads the NBG announcement.  

The next sitting of the Monetary Policy Committee is scheduled for October 23, 2019.

On September 4, the NBG has already increased the refinancing rate by 0.5% points, from 6.5 to 7%.

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.

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. 

Related Story: National Bank Increases Refinancing Rate to 7%

By Ana Dumbadze