The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on August 29, 2012 and decided to keep its Main Policy Rate (the refinancing rate) unchanged at 5.75 percent.

The core and headline inflation values in July were low, with the annual inflation reaching 0.6%. According to the existing forecasts this year and in the beginning of the next year the inflation will remain at low level will achieve its target value in the second half of the next year.

The economic activity indicators similarly to the first half of the year point at a high growth in the third quarter as well, although the output gap is still close to zero. It should be noted that the economic growth in 2012 is mostly due to the investment, meaning that there are low risks of demand side inflationary pressure. This growth in capital formation was reflected in the import growth as well, with the high growth in the import of investment goods.

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 September 26, 2012.