Georgia's National Bank reduces refinancing rate

The Monetary Policy Committee of Georgia's National Bank decreased the refinancing rate by 0.5%, to 9.5%, following a “more pronounced” reduction in the domestic inflation rate than anticipated.

The National Bank said domestic as well as external factors, and its tight monetary policy, had “effectively anchored” inflation expectations that continued to decline. 

The Bank said inflation of domestically produced goods had gradually approached the three percent target, registering at 3.8% in November. 

"The current forecast for 2024 indicates inflation temporarily overshooting its target, primarily driven by base effects, before it gradually aligns with the targeted rate in the medium term”, the statement reads.

Despite the “positive” trends, the central bank also mentioned inflationary risks that concerned  demand-side inflationary pressures caused by economic growth dynamics.

According to the bank, despite the current reduction of inflation, the monetary policy rate continued to be maintained at a “relatively elevated level”. 

The NBG added it would continue a gradual normalisation of monetary policy, in alignment with “evolving inflation forecasts”.