Thursday, January 19, 2012

Central Bank of Georgia Cuts Rate 25bps to 6.50%

The National Bank of Georgia reduced its benchmark refinancing interest rate by 25 basis points to 6.50% from 6.75%.  The Bank said: "Existing forecasts indicate that given the unchanged policy stance, the inflation rate will remain below the target. Hence the Monetary Policy Committee of the NBG considered it appropriate to continue easing the monetary policy and decided to decrease the refinancing rate by 25 basis points. The National Bank of Georgia considers that at present the recent monetary easing will be sufficient to keep the inflation in the medium term at the target level."

The Bank also cut rates 25 basis points at its December, November and October meetings 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 lastyear).  Georgia reported annual consumer price inflation of 1.9% in December, down from 2.3% in October, 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 1.67 against the US Dollar, and 2.15 against the Euro.  Georgia's central bank next meets on the 15th of February.


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