The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on October 24, 2012 and decided to keep the refinancing rate unchanged. The Monetary Policy Rate is equal to 5.75 percent.

The core and headline inflation values in September were low, with the annual inflation reaching  0.1%. 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 economic activity indicators point that the growth in the third quarter will be high, although the output gap is close to zero. According to the existing forecasts there are no expectations of economy overheating and demand-side pressures on prices.

For the past year the real effective exchange rate has been stable. In September this parameter has slightly depreciated, which is an important factor for the improvement in the current account. At the same time the said dynamic in the real exchange rate also indicates that there are no risks of economy overheating.

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 November 21, 2012.