Press Conference of Koba Gvenetadze
"As you know, after every other
meeting of Monetary Policy Committee, the governor of NBG holds a
press-conference for the broad spectrum to inform the decision of the
committee. The Monetary Policy Committee (MPC) of the National Bank of Georgia
(NBG) met on 26th of July, 2017 and decided to keep the refinancing rate
unchanged at 7 percent. In the second quarter of 2017, the hike of inflation is
in line with existing forecasts, according to which due to one-time, supply
side factors, the inflation is expected to remain above the target rate for the
remainder of the year. I want to make a minor explanation regarding the
inflation target rate. We have point inflation target, meaning, while
implementing monetary policy in short-term period we target 3% inflation rate. Moreover, in the short
term, inflation may stay above or below the target rate. Although we state, that inflation
target rate is 3%, we do not mean from 0-3%, but we mean inflation near 3%.
In June, the annual inflation rate has increased, reaching 7.1%. The price increase on Tobacco products and fuel has contributed by 2.6 percentage points. The increase in the inflation rate is temporary, it is expected inflation to start declining from the second half of the 2017 and with the after the impact of one-off factors will die out in the beginning of 2018 the inflation will converge to its target level. Thus, there is no need for further tightening of monetary policy. Given the absence of additional shocks in the medium term, the policy rate is expected to decrease to its neutral level.
In the first half of 2017, economic growth indicators reveal higher than expected growth, which can be attributed to the improvement of the external sector. In particular growth of exports of goods and services (tourism) should be noted, as well as the increase in remittances. Along with the rise of external inflows, consumption has increased, contributing to economic growth. Yet, domestic demand and overall economic activity are still below its potential level; thus, it does not create demand side pressure on inflation,"- stated the Governor of NBG.
Within the frameworks of press conference, Koba Gvenetadze responded to the questions of media representatives.