BAKU, Azerbaijan, December 11
By Tamilla Mammadova – Trend:
National Bank of Georgia (NBG) has increased the refinancing rate by 0.5 percentage points to 9 percent, Trend reports referring to the bank.
The decision was made at a meeting of the bank's monetary policy committee on December 11.
"The annual inflation in November reached 7 percent, which was mainly influenced by the depreciation of the Georgian lari," says NBG.
As reported, the bank started increasing the refinancing rate in September this year with the purpose to decrease the pressure of the exchange rate on the inflation.
According to NBG, as of today, one dollar is worth of 2.9089 Georgian lari.
"Despite the current strengthening of the Georgian lari, the exchange rate is still depreciated which makes inflationary expectations higher than the target inflation,” said the bank.
Target inflation was defined at 3 percent by NBG.
According to the NBG’s forecast, inflation will start to decline beginning in March of next year, and will be close to target inflation by the end of 2020.
"By steering interest rates, NBG influences the level of inflation. Specifically, the change in short-term rates is transmitted to long-term rates, which, ultimately, affects the interest rates on loans," says the NBG.
In addition, when projected inflation is above the target inflation rate, NBG raises the refinancing rate to combat a future surge in the general price level.
The next meeting of the NBG’s Monetary Policy Committee is scheduled for January 29, 2020.
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