The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on December 12, 2018 and decided to keep the refinancing rate unchanged at 7.00 percent.
The annual inflation has decreased in the beginning of 2018 and, in line with forecasts, remains mostly below the target rate of 3%. In November the annual inflation stood at 1.9%. According to current forecast, other things equal the inflation will fluctuate around the target rate in the medium term.
In July 2018 the NBG started the gradual easing of the monetary policy. As declared on the previous MPC meetings this normalization process will be slow, taking into account the possible transmission of regional risks on inflation. In spite of the decrease in the macroeconomic risks coming from the external sector, the inflation forecast is still affected by uncertainties. Hence the MPC decided to keep the policy rate unchanged at this stage. The speed of normalization will depend on how fast the output gap will close on one hand and how strongly the increased regional macroeconomic risks will be transmitted to Georgian economy – on the other.
The positive trends in the external sector have been maintained. Goods export annual growth rate in the first ten months of 2018 was 25% whereas the tourism revenues have grown by 20% in the same period. The positive trend has continued in the growth of the remittances from abroad – 16% annually. The credit growth is high as well, supporting the aggregate demand. In the recent month leading indicators have been pointing to the acceleration in economic growth.
The NBG will continue to monitor the developments in the economy and financial markets and will use all means and instruments at its disposal in order to ensure the price stability.
The next meeting of the Monetary Policy Committee will be held on January 30, 2019.
