BAKU, Azerbaijan, Feb. 1
By Tamilla Mammadova – Trend:
Inflation will start to decline at the beginning of this year and will approach the target by the end of the year, National Bank of Georgia (NBG) told Trend.
As the bank noted, in December 2019 inflation was 7 percent (in November - 7 percent).
"This will be ensured by monetary policy, which will remain tight until medium-term inflation expectations fall to the target level," said NBG.
As noted, last year the nominal exchange rate of lari depreciated. This depreciation had impact on the inflation rate and the National Bank tightened monetary policy to curb the inflationary pressures.
"In December 2019,, the nominal exchange rate appreciated a little but it still remains depreciated. If we see that exchange rate creates inflationary pressure, the National Bank of Georgia will use all means and instruments (primarily the policy rate) at its disposal to ensure the price stability," said the bank.
Following the depreciation of the nominal effective exchange rate and amplified inflation expectations, the bank tightened the monetary policy during September-December, 2019.
"Along with one-off factors, the overshooting the target was caused by the increased pass-through from the nominal exchange rate depreciation to inflation in previews periods," said the bank.
According to the NBG’s forecast, other things equal, the inflation will remain above the target, but it will start to decline at the beginning of the year and stay close to the target in the medium term.
In December 2019, the assets of the banking sector in Georgia equaled 47.18 mllion lari ($16.3 million).
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