📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Georgia's central bank eases monetary policy amid declining inflation

EditorPollock Mondal
Published 09/13/2023, 07:54 PM

The National Bank of Georgia (NBG) has reduced its key refinancing rate by 0.25 percentage points to 10% on Wednesday, citing a downward trajectory of inflation. The decision was made by the Monetary Policy Committee, which noted that the annual inflation rate is expected to further decline and stabilize at around 3% in the months after 2023.

The NBG's move comes amid a backdrop of lower prices for food and raw materials, along with a drop in international shipping costs to almost pre-pandemic levels, which have eased inflationary pressures. Furthermore, a stronger GEL exchange rate has lowered the price of imported goods in Georgia. The country's annual inflation was at 0.9% in August, with local inflation standing at 6.1%, albeit declining at a slow pace.

Despite these positive trends, the NBG has expressed caution due to high uncertainty stemming from the geopolitical situation. It noted that domestic economic developments, such as the acceleration of foreign currency lending, remain noteworthy and could potentially lead to additional inflationary pressures in the future.

In response to these dynamics and forecasts from previous meetings, the NBG has initiated a gradual exit from its tight monetary policy stance. This will involve reducing the refinancing rate at a moderate pace. The bank has assured that it will continue to monitor developments in the economy and financial markets, using all available instruments to ensure price stability.

In contrast, on August 16, 2023, the Federal Reserve expressed concerns over the pace of inflation and suggested that future rate hikes could be necessary if conditions do not change. The federal funds target rate currently stands between 5.25 and 5.50 percent, marking its highest level in over twenty-two years.

The central banks' differing approaches highlight the distinct challenges each faces in maintaining economic stability. While Georgia's central bank is easing its monetary policy amid declining inflation, the Federal Reserve is contemplating tightening measures to combat rising inflation.

The next meeting of the Monetary Policy Committee of the National Bank of Georgia is scheduled for October 25, 2023.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.