Central Bank Keeps Key Rate at 7.25%

The key refinancing rate will remain unchanged at 7.25%, the National Bank of Georgia (NBG) said in its statement on January 31.

According to the NBG, the nominal effective exchange rate “significantly depreciated” by the end of last year, which “increased pressure on inflation” (6.7% in December) and “contributed to increase of inflation expectations.”

The Bank pointed out that despite GEL’s recent appreciation, the effect of its devaluation last year “has not been entirely mitigated.”

The regulator, however, anticipates that the annual inflation rate will decrease in the first months of 2018, and remain close the average target rate during the year.

The key rate remained unchanged at 8% in the first three months of 2016, but went through gradual easing beginning from April and remained unchanged at 6.5% until January, 2017.

The Bank increased the key rate to 6.75% on January 25 and to 7% on May 2, but kept the rate unchanged for three consecutive meetings until increasing it again to 7.25% on December 13.

The Central Bank’s monetary policy committee will hold its next meeting on March 14, 2018. (civil.ge)