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The central bank said that in May annual inflation stood at 6.5% and that according to its forecast it would continue to gradually decline over the rest of the year, reaching the 3% target level in the first half of 2021.
“The inflation dynamics will be determined by the interaction of both demand and supply side factors. On the one hand, the COVID-19 prevention measures led to an increase in the cost of the supply of some goods and services. However, the increase in costs has only a short-term effect on inflation rate. On the other hand, the impact of significantly weaker external and domestic demand on inflation will last longer, leading to a reduction in inflation forecasts," said the NBG.
The national lender noted that above-target inflation in the long term created the risk of rising inflationary expectations.
“Taking these factors into account, the monetary policy committee continued the gradual exit from the tightened monetary policy stance and reduced the rate by 0.25 percentage points. Despite the decline, monetary policy remains tight, ensuring a return of inflation to its target level in the medium term. The pace of further policy normalisation will depend on how quickly inflation expectations recede," the NBG stated.
The next meeting of the central bank’s monetary policy committee is scheduled for August 5.
8.3 ​Stock market
Georgian central bank announces new regulations as part of capital market reform
The National Bank of Georgia said on July 18 that it has drawn up two new regulations governing brokerage companies.
The aim of the regulations — the Rule of Licensing and Regulation of Brokerage Company and the Additional Rule of Regulation of Brokerage Companies Involved in High-Risk Financing Instruments — is to raise standards of service in the sector, and to protect investors’ interests and allow them to make well-informed decisions. They were drawn up as part of ongoing capital market reforms.
42​ GEORGIA Country Report ​July 2020 ​ ​www.intellinews.com