Page 19 - GEORptMay20
P. 19
4.2 Inflation 4.2.1 CPI dynamics
Inflation in Georgia stood at 6.1% in March
In Georgia, the annual inflation rate in March was 6.1%. The NBG predicts that due to temporary factors, inflation will remain high for several months, then gradually decline, and in the first half of 2021 approach the 3% target level.
“A sharp decline in external and domestic demand due to pandemic will create a downward pressure on inflation over the course of the year. Given the expected reduction in the demand, there is no need to further maintain such a tightened policy stance”, said the NBG.
Georgia’s central bank (NBG) on April 29 cut the refinancing rate by 0.50 percentage points to 8.5%, mentioning local and global demand-side disinflationary pressures as well as lower oil prices.
Despite the rate cut, monetary policy remains tight, ensuring a return of inflation to the target level in the medium term. The Monetary Policy Committee will exit the tight monetary policy stance gradually and further steps will depend on how quickly inflation expectations recede.
19 GEORGIA Country Report May 2020 www.intellinews.com
