Jun 13, 2019

NBG leaves monetary policy rate unchanged at 6.5%

Quick Update

  • On its 12th of June meeting, the Monetary Policy Committee (MPC) of the National Bank of Georgia decided to keep the policy rate unchanged at 6.5%.
  • One-off factors, such as a higher excise tax on tobacco, contributed by 1.3 PP to May’s annual 4.7% inflation, together with higher oil prices in the beginning of the year. Inflation excluding food, energy and tobacco stood at 1.1%. According to the central bank, the pick up of inflation is seen as temporary, and once the exogenous one-off factors are exhausted, inflation will start to decrease and move closer to its target level in the beginning of 2020. Furthermore, demand side pressures are still assessed somewhat weak. At the same time, the committee takes into account the risks of rising inflation expectations and therefore further monetary policy normalization is expected to continue at a slower pace.
  • The committee also assessed the credit growth at around 13% to be moderate and the exchange rate as competitive, supporting the improvement of the current account deficit.  
  • Next MPC meeting is scheduled on the 24th of July 2019.
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