The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on September 14, 2011 and decided to keep its Main Policy Rate (the refinancing rate) unchanged at 7.5 percent.

Consumer Price Index increased by 1.1 percent in July, 2011 compared to the previous month. At the same time, due to the base effect, the annual inflation rate decreased to 7.2 percent. The share of food remains high in the annual rate of inflation and amounts to 5.2 percentage points. The core inflation measures keep decreasing. Namely, the inflation net of food and energy (core inflation) decreased 0.1 percent in August.

As expected, in the recent months inflation kept decreasing. This trend could possibly continue in future. According to the existing forecasts, the inflation by the end of the year will be within the target level.

Notably, the loans extended in the national currency have increased in the recent period, particularly in case of loans extended to legal persons. The increase of national currency loans to the economy will promote economic growth with less risks accumulating.

Recently the growth in economic activity has been stable. The decrease of the interest rates, decided on by the MPC at previous meetings has not yet been fully transmitted to economic activity. Accordingly, at this stage the committee decided to keep the policy rate unchanged.

The NBG will closely monitor developments in the economy and financial markets and will act accordingly.

The next meeting of the Monetary Policy Committee will be held on October 26, 2011.