The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on May 13, 2009 and decided to maintain its main policy rate (the refinancing rate) unchanged at 6 percent.

The annual rate of inflation in April has increased to 1.8 percent. The average annual inflation stands at 6.9 percent. The existing risks to inflation have not changed noticeably since the Committee’s last meeting. Low level of inflation is likely to prevail during 2009.

After the introduction of foreign exchange auctions the situation on the foreign exchange market  stabilized and the need for the NBG interventions decreased, accordingly the NBG interventions fell down. As for the future, the NBG plans to intervene only through the foreign exchange auctions, and the official exchange rate will be determined based on the transactions recorded on the interbank foreign exchange market. Implementing these measures will stimulate the development of money market and reduce dollarization, which will increase the effectiveness of the monetary transmission mechanism.

There are several positive signs of easing economic downturn on the world market, which was reflected in the price increases on several commodities among which are metals and oil products.

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

The next meeting of the Monetary Policy Committee will take place on June 24, 2009.