Wednesday, December 14, 2016

Georgia holds rate, omits guidance of future easing

    Georgia's central bank left its benchmark refinancing rate at 6.50 percent, saying inflation is expected to rise from an planned one-time rise in excise taxes but demand remains weak and should restrain inflation in the medium term.
    The National Bank of Georgia (NBG) has cut its rate four times this year by a total of 150 basis points and said in October that it expected to cut the rate to 6.0 percent over the next two quarters.
   Today the bank's monetary policy committee omitted any specific reference to future decisions, merely saying it would take into account factors that affect inflation expectations.
    Georgia's inflation rate rose slightly to 0.2 percent in November from minus 0.2 percent in October, with the NBG attributing this to international markets, commodity prices and weak demand.
    It added that its monetary easing, which has lowered the rate on lari-denominated loans, should help stimulate demand while exports are rising and tourism and remittances are on an upward trend.
    The exchange rate of Georgia's lari has weakened in recent months due to the global rise in the U.S. dollar, the depreciation of the Turkish lira and through trade channels, the bank said.
    The lari hit a new all-time low of 2.66 today and earlier this month the central bank said it expected the lari to stop losing value soon, urging people to avoid what it described as "harsh decisions" by buying foreign currency.
    The exchange rate of the lari is down 9.8 percent since the start of this year.
    Last month the International Monetary Fund estimated 2016 growth of 2.7 percent and average inflation of 2.0 percent, with growth rising to 4 percent next year and inflation at 3.0 percent.


Post a Comment