**National Bank of Georgia Keeps Key Rate Unchanged**
The Monetary Policy Committee of the National Bank of Georgia (NBG) decided to keep the key refinancing rate unchanged at 8% on January 29. This decision was made despite a slight increase in inflation, which rose by 1.9% year-on-year in December.
**Inflation Remains Below Target**
The NBG noted that inflation in Georgia has remained below the target level of 3% since 2023. The prices of domestically produced goods and services increased by 2.2% year-over-year in December, a relatively slow pace.
**Economic Growth Continues**
Despite the favorable inflation dynamics, the central bank warned of increased uncertainty due to domestic and geopolitical turbulence. However, it expects inflation to remain close to the target in the first half of 2025, assuming stability in international markets.
**Risk Scenarios Evaluated**
The NBG evaluated various risk scenarios, including a high-inflation risk scenario, where prolonged uncertainty and intensified geopolitical tensions would amplify inflationary pressures. Conversely, a low-inflation risk scenario would reduce inflationary pressures and accelerate economic growth.
**Policy Rate to Normalize**
Looking ahead, the NBG indicates that as risks subside, the policy rate will gradually normalize toward a neutral level of 7% and aim to keep the overall price level increase close to the 3% target over the medium term.
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