BAKU, Azerbaijan, March 17
By Tamilla Mammadova – Trend:
The National Bank of Georgia (NBG) has decided to increase the refinancing rate by 0.5 percentage points to 8.5 percent, Trend reports via the NBG.
The decision was made at a meeting of the Monetary Policy Committee.
Last month annual inflation stood at 3.6 percent; the NBG says that the reduction of inflation since last December is related to the subsidization of utility fees.
"The end of the subsidy from March 2021 will correspondingly be reflected in the inflation rate. The base effect of this subsidy will have an upward impact on the inflation rate in December 2021 and January-February 2022. According to the current forecast, inflation will on average remain around 4-4.5 percent in 2021 and then gradually approach the target", says the NBG.
The NBG explains that when deciding to increase the refinancing rate, the monetary policy committee also took into account increased prices on international commodity markets.
At the same time, on the back of reduced output due to the pandemic, the NBG says that the average production costs are higher, being another source for the upward pressure on inflation.
The committee also took into account the depreciated exchange rate and the high dollarisation of the economy which are other factors pushing inflation upwards.
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