Wednesday, October 24, 2012

Georgia keeps rate on hold, still sees inflation on target

    The central bank of Georgia kept its refinancing unchanged at 5.75 percent, confirming that it still expects inflation to hit the bank's target in the medium term and the output gap remains insignificant.
     The National Bank of Georgia, which has cut its rate four times this year for a total reduction of 100 basis points, said there were no signs of the economy overheating and demand-side pressure on prices.
    Georgia's Gross Domestic Product expanded by an annual 7.3 percent in the third quarter, down from 8.2 percent in the second quarter.
   Georgia is suffering from deflation, with annual prices down 0.1 percent in September compared with an annual drop of 0.4 percent in August. On average, prices this year are down 03 percent.
    "According to existing forecasts in the coming months the inflation will start moderate growth and will approach its target value in the second half of the next year," the central bank said in a statement.
    The bank targets an inflation rate of 6.0 percent.  In 2011 the inflation rate fell to 2.0 percent from 11.2 percent in 2010.
    In its previous policy statement from last month, the bank also said that it expected inflation to reach its target in the medium term.


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