National Bank of Georgia Interest Rate Reduced to 8.25% from 9.0%
March 13, 2024
Officials at the National Bank of Georgia implemented a bigger interest rate cut of 75 basis points this month than those of 50 bps at the prior two policy reviews. They cited the very low CPI inflation rate of 0.3% versus a target of 3.0% and a high-water mark of 13.9% recorded in December 2021 and January 2022. The NBG’s interest rate had been at 11.0% from March 2022 until May 2023. At 8.25% now, it is withing 25 basis points of the pandemic low of 8.0% maintained from August 2020 until an initial rate hike in March 2021.
In justifying today’s Georgian interest rate cut, a released statement also cites falling measures of expected inflation but also guards against over-complacency:
The low inflation environment helps the inflation expectations decline, which further significantly lowers the inflationary risks in the medium term. Other things equal, inflation is expected to remain below the target of 3 percent at the beginning of 2024, while stabilizing close to it in the medium term. Should factors amplifying inflation expectations and external sector risks become apparent, other things equal, maintaining the current tight stance for a longer period or further policy tightening may become necessary.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: National Bank of Georgia
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