The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on February 18, 2009 and made the decision to lower its main policy rate (the refinancing rate) by 100 basis points to 7 percent.

The annual rate of inflation in January decreased to 4.4 percent. As a result average annual inflation stands at 9.4 percent. According to existing forecasts, the downward pressure to inflation has increased since the Committee's last meeting. Increase in prices on short-term consumer goods is lower than average inflation; this has weakened inflationary expectations for households.

The outlook for growth of money aggregates is still negative, which is also affected by low credit activity. The National Bank of Georgia is planning to initiate new monetary policy instruments to supply additional liquidity to the system.

Forecasts on world economic growth remain pessimistic. According to updated global economic forecasts of the International Monetary Fund, annual economic growth in 2009 is projected to be 0.5%, which is 1.7 percentage points lower than the forecast made couple month ago. Economic growth outlook has deteriorated substantially in Georgia's neighboring and main trade partner countries. According to current NBG projections, the growth rate for the Georgian economy is also expected to decline to 2% in 2009.

The NBG will closely monitor current developments in the economy and the financial markets and will, in due course, act accordingly.

The next meeting of the Monetary Policy Committee will be held on March 18, 2009.