The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on December 17, 2014 and decided to keep the refinancing rate unchanged at 4 percent.
The economies of our main trading partners have been deteriorating as of late, affecting Georgian economy. According to preliminary information both goods export and remittances have significantly decreased in November. Despite recent depreciation of GEL vs USD, the nominal effective exchange rate has appreciated. This, coupled with the general trend of decline in world commodity prices allows concluding that no increase in inflationary pressure should be expected.
According to existing forecasts inflation will reach its 5% target value in the second half of 2015. Hence, the National Bank still considers the phased exit out of accommodative monetary policy and considers increasing the policy rate to 5% by the second half of 2015. At the same time, the National Bank took into account that the difficult situation in the region will negatively affect the external demand and therefore decided to keep the monetary policy rate unchanged at 4.0%. The annual inflation in November 2014 was 2.8%.
The NBG will continue to monitor the developments in the economy and financial markets and will use all means and instruments at its disposal to ensure price stability. The dynamics of further changes in monetary policy will depend on the dynamics of expected inflation, tendencies in economic growth, global and regional economic environment.
The next meeting of the Monetary Policy Committee will be held on February 11, 2015.