Georgia Central Bank Leaves Policy Rate Unchanged

(RTTNews) - Georgia's central bank maintained its benchmark interest rate at its October meeting, citing a decline in inflation from its peak yet the rate of inflation remaining high.

The National Bank of Georgia's Monetary Policy Committee made the decision on Wednesday to maintain the policy rate at 11 percent.

The previous change in the rate was a 50 basis points hike in March.

In line with the appreciated exchange rate, the global trends will gradually be transmitted to the local market, reducing inflation, the bank said.

Inflation in Georgia has retreated from its peak, however it still remains at a high level, at 11.5 percent in September.

The central bank forecast inflation to remain high until the end of the year, then gradually decline and approach its target level by the end of the year.

Economic activity in Georgia is still strong, as the Russia-Ukraine war and the accompanying sanctions imposed on Russia have significantly increased migration flows into Georgia, boosting demand, the bank observed.

Therefore, the bank's economic growth forecast for this year has been upgraded to 10 percent, hinting that the average annual level of economic activity is expected to exceed its potential level.

Taking into account the existing inflationary risks, tight monetary policy will be maintained and its normalization will gradually begin only after a clear trend of decreasing inflation will be observed, the bank said in a statement.