The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on September 26, 2012 and decided to keep its Main Policy Rate (the refinancing rate) unchanged at 5.75 percent.

The core and headline inflation values in August were low, with the annual inflation reaching -0.4%. According to the existing forecasts in the coming months the inflation will start moderate growth and will approach its target value in the second half of the next year.

The GDP growth in the second quarter was 8.2%, which is quite high. The economic activity indicators point that the output gap during the year will be close to zero.

For the past two months there has been a certain deceleration in credit growth rates, caused by the decrease in the demand, which is characteristic for the pre-election period. Given the high liquidity in the banking sector, the credit activity from the banks is expected to increase in the coming months.

Given that the inflation is predicted to achieve the target in the medium term and that the output gap is insignificant the National Bank of Georgia decided to keep the Monetary Policy Rate unchanged.

The NBG will continue to monitor the developments in the economy and financial markets and will act accordingly.

The next meeting of the Monetary Policy Committee will be held on October 24, 2012.