Georgia's central bank held its benchmark refinancing rate steady at 3.75 percent as the impact of five rate cuts earlier this year have yet to be fully reflected in the real economy.
The National Bank of Georgia (NBG), which has cut rates 150 basis points this year for a total reduction of 425 points since July 2011, said it was still expecting inflation to remain at a low level and first return to its 6.0 percent target at the end of 2014.
Georgia's inflation rate was a negative 0.4 percent on an annual basis in August and the central bank said it expects the inflation rate to decline further in September due to temporary factors impacting the supply side. Since February 2012 Georgia has been gripped by deflation.
Lending activity in Georgia is still at a modest level, the bank said, though loans are expected to increase as low interest rates encourage demand.
The central bank noted positive trends in the external sector with remittances from abroad up by an annual 11.2 percent in August, boosting domestic demand.