Friday, October 28, 2011

National Bank of Georgia Cuts Rate 25bps to 7.25%

The National Bank of Georgia cut its benchmark refinancing interest rate by 25 basis points to 7.25% from 7.50%.  The Bank said: "The annual inflation rate dropped below the target level of the NBG in September and is expected to decrease further at the beginning of the next year. According to the existing forecasts, the inflation forecast in 2012 will remain below the target level. Accordingly, the Monetary Policy Committee of the NBG considered it appropriate to continue easing the monetary policy and decided to decrease the policy rate by 25 basis points."

The Bank also cut rates 25 basis points at its August meeting; previously the Georgian central bank also cut the interest rate by 25bps to 7.75% in Jun, after holding steady in May (the bank last increased the rate by 50 basis points in February this year).  Georgia reported annual consumer price inflation of 4.6% in September, down from 7.2% in August, 8.5% in July, and 13.5% in April, and below the Bank's inflation target of 6.0%; meanwhile the full-year government inflation forecast is 7%.  

According IMF statistics, Georgia saw average annual inflation of 4.95% in 2010, with the full year figure at 5.04%, while the Georgian economy grew just 2%.  Georgia's currency, the Georgian Lari (GEL), last traded around 1.65 against the US Dollar, and 2.33 against the Euro.  Georgia's central bank next meets on the 22nd of November.


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