Page 47 - GEORptOct22

The Monetary Policy Committee of the National Bank of Georgia (NBG) at its meeting on September 14 left the refinancing rate at 11%. The bank said that "inflationary pressures remain quite high both in Georgia and in the rest of the world", and added that international sanctions imposed on Russia in connection with the invasion of Ukraine and additional disruption to supply chains made food, raw materials and energy resources much more expensive in the world markets.
According to the bank, "inflationary risks are further enhanced by the fact that against the backdrop of successive shocks, inflation deviated from the target level for a long time."
However, the bank notes that recently there has been a positive trend in international markets, and the price of Brent oil and the cost of international transportation continue to decline, while the international food index in July fell by 9% compared to the previous month and by 1.9 % in August. "It is expected that these trends will gradually be transferred to the local market," the bank said. Noting that the annual growth of consumer prices in August, as in the previous month, maintained a downward trend and amounted to 10.9%, the bank said that "signs of declining inflation give grounds for cautious optimism".
In this regard, the NBG stated that inflation will gradually decrease in the current and next year and will approach the target level from mid-2023.
The next meeting of the Monetary Policy Committee will take place on October 26.
On 30 March 2022, the National Bank of Georgia (NBG) raised the refinancing rate by 0.5ppts to 11.0%. This decision was mostly driven by the rise in global commodity prices affecting Georgia via high oil prices as well as a wave of monetary policy tightening across the regional countries. The NBG’s communication remained balanced like in previous releases, citing that monetary policy will keep a tightening bias until the risks of rising inflation expectations are sufficiently mitigated.
Georgia’s central bank is in a position to adopt a more dovish position and will perhaps cut the refinancing rate from 11% currently to 10.25% by the end of the year, CEO of Georgian bank TBC, Vakhtang Butskhrikidze, commented, as quoted by Business Media Group.
TBC lowered its baseline forecast for the year-end inflation from around or slightly above 9.5% to around 8.5%, assuming some further decline in
47 GEORGIA Country Report October 2022 www.intellinews.com