By Central Bank News
The National Bank of Georgia kept its main policy rate, the refinancing rate, unchanged at 5.75 percent as inflation is expected to reach the bank’s target in the medium term and the economy’s output gap is insignificant.
Georgia’s central bank said Gross Domestic Product growth in the second quarter was 8.2 percent, which the bank described as “quite high.”
The central bank has cut its policy rate four times this year for a total reduction of 100 basis points.
Inflation in Georgian fell to an annual rate of minus 0.4 percent in August for an annual average of 0.1 percent, significantly below the bank’s target of 6.0 percent.
“According to existing forecasts in the coming months inflation will start to moderate and growth will approach its target value in the second half of the next year,” the central bank said in a statement.
Georgia’s inflation rate fell to 2.0 percent in 2011 from 11.2 percent in 2010.
It said credit growth had decelerated in the past two months, which is typical ahead of elections, but credit activity is expected to increase in coming months given high liquidity in the banking sector.
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