May 2, 2019

NBG leaves monetary policy rate unchanged at 6.5%

Quick Update

  • On its 1st of May meeting, the Monetary Policy Committee (MPC) of the National Bank of Georgia decided to keep the policy rate unchanged at 6.5%.
  • According to the MPC’s statement, despite domestic demand still being below its potential level, considering the risks stemming from the external sector the normalization of the monetary policy will remain gradual. The decision to leave the key rate unchanged reflects these considerations.
  • In Q1 2019 inflation remained around the NBG’s target. According to the central bank, one-off factors such as a higher excise tax on tobacco contributed 1.3 PP to March’s 3.7% inflation and once these temporary effects are exhausted, inflation will be moving to its target level.
  • The MPC also assessed current economic developments stating that external demand maintains moderate growth as well as credit increasing by around 13% excluding the FX effect. Overall, pressure on prices from the aggregate demand are still considered as weak.
  • Next MPC meeting is scheduled on the 12th of June 2019.