Page 49 - GEORptSep21

8.2 Central Bank policy rate
Gerogia’s central bank leaves refinancing rate at 9.5%
The monetary board of the National Bank of Georgia (NBG) on June 23 left its refinancing rate unchanged at 9.5%, despite the “temporary” inflation that reached 7.7% in May - more than twice the 3% inflation target.
The upward revision of Georgia's regulated natural gas prices in July and the base effects of the subsidised utility prices in December-February will further exert upward inflationary pressures, the NBG conceded. Still, NBG expects average inflation this year at 7% and hopes that headline inflation will return towards the target inflation rate by the end of 2022.
“According to the current forecasts, maintaining tight monetary policy for a prolonged period and the expected fade-out of one-off exogenous factors that are independent from the monetary policy will support the gradual return of inflation to the target in 2022,” NBG said in a statement.
Taking into account these factors, the monetary board decided to leave the monetary policy rate unchanged.
"The fact that inflation is much higher than the inflation target does not mean that inflation targeting does not work ," the president of the National Bank of Georgia, Koba Gvenetadze, said at a joint presentation of the World Bank 2021 Global Economic Outlook.
"No matter how undesirable it may be, high inflation this year is caused by a pandemic, and this problem is acute in developed countries as well," he said. The next meeting of the Monetary Policy Committee will be held on August 4.
49 GEORGIA Country Report September 2021 www.intellinews.com