Georgia's central bank cut its benchmark refinancing rate by 25 basis points to 5.25 percent, its sixth rate cut this year, as inflation remains below the bank's target.
The National Bank of Georgia, which has now cut rates by 150 basis points this year, said the bank had reduced its forecast for inflation over the next two years. It didn't provide specific figures, but said inflation would be below the bank's 6 percent target.
"Due to the global crises, economic growth and the inflation rate in the main trading partners is reduced. These factors further reduce the pressure on prices in Georgia," the bank said in a statement.
Georgia's consumer prices fell by 0.5 percent in November, reversing October's 1.0 percent rise, but continuing September's 0.1 percent negative rate. The central bank said the drop in November was mainly due to food prices and past exchange rate movements.
Data show a slowdown in economic activity, the bank said, adding that demand for credit remains modest despite high liquidity in the banking sector. Low growth of remittances from abroad, reflecting Europe's crises, is contributing to weak demand while demand for tourism is helping growth.
Georgia's Gross Domestic Product rose 7.3 percent in the third quarter from the same 2011 quarter.
www.CentralBankNews.info
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