The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on May 1, 2018 and decided to keep the refinancing rate unchanged at 7.25 percent.

As it was expected, once the temporary factors have mostly petered out, the inflation declined at the beginning of 2018 and it stood at 2.8 percent in March. According to the current forecast, other things equal, the inflation will remain close to its target level (3 percent) throughout the year. Despite the fact that aggregate demand remains below the potential level of output, thus having a downward pressure on inflation, the relatively higher volatility observed on international financial markets increases the risks of stronger transmission of inflationary pressures from the main trading partner countries. As a result, the committee deemed it 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 high growth of economic activity continued at the beginning of 2018. Based on preliminary estimates, economy grew by 5.6% annually in March, while in the first quarter the real growth stood at 5.2%. According to current forecasts, as in 2017, relatively high growth of economic activity is expected to carry on in 2018, thus narrowing the negative output gap.

The positive trends in the external sector persisted at the beginning of 2018. The first quarter of 2018 revealed high growth of exports and tourism revenues. The remittances continued to grow as well. However, the growth rate of imports is higher compared to the previous year.

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 June 13, 2018.