Friday, February 17, 2012

National Bank of Georgia Holds Refinancing Rate at 6.50%

The National Bank of Georgia held its benchmark refinancing interest rate unchanged at 6.50%.  The Bank said: "Despite low inflation the real exchange rate had been appreciating in the end of last year. This is related to the faster nominal appreciation of the national currency vs. currencies of main trade partners. Real appreciation on one hand causes further widening of the trade deficit and on the other causes weakening of the demand."

The Bank previously cut rates 25 basis points at its January, December, November and October meetings and another 25 basis points at its August meeting; also cutting the interest rate by 25bps in June, after holding steady in May (the bank last increased the rate by 50 basis points in February last year).  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 1.65 against the US Dollar, and 2.17 against the Euro.  Georgia's central bank next meets on the 28th of March.


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