The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on March 14, 2018 and decided to keep the refinancing rate unchanged at 7.25 percent.

Confirming the earlier forecasts, once the temporary factors have mostly petered out, the inflation started decreasing since the beginning of 2018, reaching 2.7 percent in February. According to the current forecasts, other things equal, the inflation will remain close to its target level (3 percent) throughout the year. Despite higher-than-expected economic growth in 2017, the aggregate demand is still below potential, pulling the inflation downwards. At the same time, despite the recent appreciation of the nominal effective exchange rate, the latter still pushes the inflation upwards. As a result, the committee deemed appropriate to maintain the moderately tight monetary policy. The gradual easing of the policy will be considered once the factors pushing inflation upwards are sufficiently weakened.

The preliminary estimate of the annual economic growth in January is 4.4 percent. The current forecasts indicate that, similar to 2017, in 2018 the economic activity will remain at a relatively high level, thus narrowing the output gap.

The positive trends in the external sector continued in the beginning of 2018, with January showing the high growth rates of goods export and tourism. The remittances from abroad have continued growing as well. However, the goods import growth rate has also increased compared to the last year. Overall, the current forecasts indicate an improvement in the current account deficit in 2018.

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 May 2, 2018.