Wednesday, May 8, 2013

Georgia cuts rate 25 bps for 3rd time, inflation forecast cut

   Georgia's central bank cut its refinancing rate by a further 25 basis points to 4.25 percent, its third rate cut this year, as its inflation forecasts for the next 18 months have been cut further and it now expects headline inflation to first approach it its target level by the end of 2014.
    At its previous meeting in March, the National Bank of Georgia's (NBG) policy committee said it expected inflation to approach its target in the second half of 2014.
    The central bank, which started cutting rates in July 2011, said both headline and core inflation were low in April due to lower food prices, along with the base effect and lower regulated prices.
    Georgia's deflation continued in April, the sixth month in a row with falling prices, with prices down 1.7 percent.
    The NBG said indicators showed that economic activity was weaker than expected in the first quarter of 2013 and this would also lead to inflation falling below expectations as overall demand fell along with a decrease in imports in the first quarter.
   In the fourth quarter of 2012, Georgia's Gross Domestic Product rose an annual 2.5 percent.


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