The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on December 18, 2013 and decided to keep the refinancing rate unchanged at 3.75 percent.

Price dynamics have been developing according to the NBG forecast and as expected the inflation will reach its target value by the end of 2014. The overall annual CPI inflation in November was 0.6%, whereas the monthly inflation was 0.5%. This was mostly caused by the increase in seasonal products’ prices.

The fourth quarter showed a slight increase in economic activity. According to preliminary estimates the economic growth in October was 3.9%. The foreign trade indicators also point at the increase in the domestic demand. Preliminary data show the import revival, which has increased by 22% compared to last year. External demand has increased as well with the annual increase in exports reaching 60%. The growth rate of foreign remittances remained high at 12.6%, serving as an additional source of increase in aggregate demand.

Given that the inflation has been growing as expected and that the increase in economic activity pushes it further to its target value in the medium term, the National Bank sticks to the accommodative monetary policy and keeps the policy rate unchanged.

The NBG will continue to monitor the developments in the economy and financial markets and will tighten the monetary policy in case the inflation forecast exceeds its target value.

The next meeting of the Monetary Policy Committee will be held on February 12, 2014.