Tuesday, November 22, 2011

National Bank of Georgia Reduces Rate 25bps to 7.00%

The National Bank of Georgia reduced its benchmark refinancing interest rate by 25 basis points to 7.00% from 7.25%.  The Bank said: "Given that the total output is below the potential and the existing forecasts indicate that the inflation in the next year will remain below the target, 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 October meeting and another 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 2.3% in October, down markedly from 4.6% in September, 7.2% in August, 8.5% in July, and 13.5% in April, and below the Bank's inflation target of 6.0%.

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 2.23 against the Euro.  Georgia's central bank next meets on the 21st of December.


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