2023.03.2917:21:00UTC+00Georgia Central Bank Leaves Key Policy Rate Unchanged

Georgia's central bank maintained its benchmark interest rate at its March meeting, citing high uncertainty and risk as well as the inflation that has embarked on a downward trend.

The National Bank of Georgia's Monetary Policy Committee decided on Wednesday to maintain the refinancing rate at 11 percent.

"Considering the high uncertainty and risks, the NBG remains focused on reducing inflation and maintains a tight monetary policy," the NBG said in a statement.

"If the current trends are maintained, it will be possible to begin a gradual exit from the tight monetary policy stance only after the trend of reduction in domestic inflation is evident."

The previous change in the rate was a 50 basis points hike in March last year.

In February, headline inflation decreased to 8.1 percent, while core inflation dropped to 6.6 percent. External factors such as oil price, shipping costs and food prices also led to decrease of inflation.

The stronger lari exchange rate is allowing these trends to being gradually transmitted to the local market reducing the imported inflation, the central bank said.

The reduction of headline inflation has been supported by tight monetary policy and fiscal consolidation and slower credit growth, the bank said.

The bank also said that the inflationary expectations are declining.

The NBG expects headline inflation to continue declining at a significant rate and is likely to be below the target level in the second half of the year, ensuring that long-term inflation expectations remain anchored to the target.

The next meeting of the Monetary Policy Committee will be held on May 10, 2023.

The NBG also said it continuously monitors the developments in the economy and financial markets and will use all available tools to ensure price stability.