The National Bank of Georgia publishes the Monetary Policy Operations Manual
29 March, 2019
Improvement of monetary policy communication and securing
transparency is one of the priorities of the National Bank of Georgia
(NBG). Hence, considering the experience of leading central banks, the
NBG has developed a "Monetary Policy Operations Manual". It provides the
detailed description of the conduct of monetary policy by the NBG that
ensures its main objective of price stability. The Manual covers both
the main principles of monetary policy formation and operational
details. The document is published on the NBG website and aims at
informing the public about the functions and activities of the NBG.
The main objective of the NBG is to maintain price stability, which is a
precondition for the long-term sustainable economic growth. The NBG
operates under inflation targeting framework. This regime, which is seen
as arguably the most efficient contemporary approach to maintaining
price stability, relies on the announcement of an inflation target to
guide the monetary policy in maintaining inflation close to the target
level in the medium term. In the case of Georgia, the inflation target
is set at 3%, and the monetary policy is conducted in a way that
inflation is maintained around the target level in the medium term.
Clearly, inflation target does not mean a 3-percent limit, as in the
short-term inflation may deviate from the target level in both
directions. However, as a result of the monetary policy of the NBG, the
inflation will always return to the target level of 3% in the medium
The main instrument of the monetary policy is the monetary policy rate.
Decisions to change the rate are made based on inflation forecasts. The
monetary policy framework includes liquidity management, short-term
liquidity forecasting, monetary policy instruments and collateral
The Monetary Policy Operations Manual also covers the exchange rate
policy of the NBG. Furthermore, the document describes current
challenges, particularly dollarization. To tackle this matter is a
precondition for further improvement in monetary policy efficiency.