Refinancing rate increased in Georgia

The National Bank of Georgia (NBG) has decided to increase its refinancing rate in response to expectations of increased inflation.

The Monetary Policy Committee (MPC) of the bank increased the refinancing rate by 25 basis points to 7.25%.

The NBG said the monetary policy decision was based on macroeconomic projections forecasting inflation in upcoming months – further changes to monetary policy will depend on actual inflation, factors affecting inflation and the general state of the economy.

"Survey indicators for the last two months indicate a rise in inflation expectations, while the improvement of the economic activity by more than was expected is likely to reduce the possibility of a reduction in inflation. In order to reduce inflation in the mid-term period it was necessary to tighten the monetary policy. At this stage the refinancing rate will be increased by 25 basis points," Agenda.ge cited the press release as saying.

The NBG forecasts inflation to start decreasing from the beginning of 2018 in Georgia.