The National Bank of Georgia maintained its benchmark refinancing interest rate unchanged at 7.50%. The Bank said: "As expected, in the recent months inflation kept decreasing. This trend could possibly continue in future. According to the existing forecasts, the inflation by the end of the year will be within the target level." The Bank further noted: "Recently the growth in economic activity has been stable. The decrease of the interest rates, decided on by the MPC at previous meetings has not yet been fully transmitted to economic activity. Accordingly, at this stage the committee decided to keep the policy rate unchanged."
The Bank cut rates 25 basis points at its previous meeting; previously the Georgian central bank also cut the interest rate by 25bps to 7.75% in Jun, after holding steady in May (the bank last increased the rate by 50 basis points in February this year). Georgia reported annual consumer price inflation of 7.2% in August, down from 8.5% in July, and 13.5% in April, and above the Bank's inflation target of 6.0%; meanwhile the full-year government inflation forecast is 7%. 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%.
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