**Lari Shows Enviable Stability: National Bank President**
For the past few years, the Georgian lari has been remarkably stable. In fact, its exchange rate has been steady for the last two years. Natia Turnava, President of the National Bank, recently attributed this stability to sound macroeconomic fundamentals in a presentation to Parliament.
Turnava explained that the lari’s stability is not just due to the National Bank’s monetary policy, but rather a result of a stable economy with good fundamentals. She said that exports, remittances, investments, tourism, and confidence in the lari are all key factors contributing to its stability. The National Bank also plays a role through its monetary policy and interest rates.
**Low Inflation Rates**
In 2024, inflation remained low, averaging just 1.1%. Core inflation, which excludes prices of food, energy, and cigarettes from the consumer basket, was even lower at 1.6%. Turnava noted that these low-inflation rates were primarily driven by domestic economic factors.
The National Bank’s monetary policy has helped keep price stability and kept inflationary expectations within target ranges. Additionally, improvements in the economy’s production potential have reduced pressure on prices from strong demand.
**Monetary Policy Normalization**
Turnava also mentioned that the National Bank began to normalize its monetary policy in 2024 by reducing the policy rate by 1.5 percentage points to 8.0%. However, due to heightened global risks, the bank kept the rate unchanged in the second half of the year.
Overall, the lari’s stability is a positive sign for Georgia’s economy. The National Bank will continue to work towards maintaining this stability through sound monetary policy and good economic fundamentals.
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