Georgian Central Bank Holds Refinancing Rate at 6.50%

The National Bank of Georgia kept its benchmark refinancing interest rate unchanged at 6.50%.  The Bank said: "The inflation forecast hasn't changed from the previous months. According to existing forecasts inflation will remain low in the first half of the year. Starting in June the inflation will start growing and it is expected to reach its target value by the beginning of the next year."

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 -2.1% in February, down from 1.9% in December, 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 2.20 against the Euro.  Georgia's central bank next meets on the 25th of April.

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