The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on September 5, 2018 to and decided to keep the refinancing rate unchanged at 7.0 percent.
The annual inflation has decreased in the beginning of 2018 and, in line with forecasts, moved around the target rate of 3% throughout the year. In August annual inflation reached 3.1%. According to current forecast, other things equal, the inflation both this year and in the medium term will fluctuate around the target rate. The macroeconomic risks have risen given the regional developments, causing increased volatility on financial markets. However, even in case these risks are realized, the significant deviation of inflation from its target is not expected. According to the NBG estimates, there still is the necessity of gradual exit from tight monetary policy, although how this process will be carried out depends on the magnitude of external risks.
Economic activity in the first half of 2018 was quite high, with the preliminary estimates of economic growth in the first seven months reaching 5.5%. Such dynamics is conducive to narrowing the output gap at a fast rate.
The positive trends in the external sector have been maintained. Goods export is growing at a high rate (with the y-o-y growth of 29% in the first seven months). In the same period the tourist revenues have grown by 22%. The remittances from abroad have continued growing at a high rate as well – 18% annually. However, given the strengthening of domestic demand, the goods import growth rate has also increased significantly (23%).
The NBG will continue to monitor the developments in the economy and financial markets and will use all means and instruments at its disposal in order to ensure the price stability.
The next meeting of the Monetary Policy Committee will be held on October 24, 2018.