The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on October 26, 2011 and decided to lower its Main Policy Rate (the refinancing rate) by 25 basis points to 7.25 percent.

As expected, the decreasing trend of inflation continued in September as well. Annual inflation stands at 4.6% as of September and core inflations remain low. Specifically, core inflation (net of food and energy) amounts to 0.5 percent.

According to the existing forecasts, inflation is expected to remain low till the end of the year and will further decrease at the beginning of 2012.

In recent months the bank credits to the economy has increased considerably, particularly the loans disbursed in the domestic currency. The growth in loans stimulated economic activity and as a consequence, increase in the growth rate of the economy was observed in the third quarter.

The annual inflation rate dropped below the target level of the NBG in September and is expected to decrease further at the beginning of the next year. According to the existing forecasts, the inflation forecast in 2012 will remain below the target level. Accordingly, the Monetary Policy Committee of the NBG considered it appropriate to continue easing the monetary policy and decided to decrease the policy rate by 25 basis points.

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 22, 2011.