By www.CentralBankNews.info Georgia’s central bank cut its benchmark refinancing rate by 25 basis points to 5.25 percent, continuing its policy of cutting rates as inflation remains below the bank’s target.
The National Bank of Georgia, which has cut rates six times this year by a total of 150 basis points this year, said it was further reducing its forecasts for inflation over the next two years. It did not give specific figures, but the central bank targets inflation of 6 percent.
Georgia’s annual headline inflation rate contracted by 0.5 percent in November, down from a 0.1 percent rise in October, due to lower food prices and exchange rate fluctuations. In 2011 the inflation rate was 2.0 percent, down from 2010’s 11.2 percent.
“Due to the global crises and its impact on our main trading partner countries, economic growth and inflation is reduced. These factors are further reducing the pressure on prices in Georgia,” the bank said.
Georgia’s Gross Domestic Product expanded by an annual 7.3 percent in the third quarter, slightly down from 8.2 percent in the second quarter, but the bank said demand was weakening and the growth of remittances from abroad, especially from Europe, was slow.
But the increase in demand for tourism was contributing to a substantial growth in revenue.
Despite high liquidity in the banking sector, the bank said credit demand was modest.
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