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Georgia central bank raises policy rate to 7.5%

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Georgia central bank raises policy rate to 7.5%

The National Bank of Georgia on Sept. 25 raised its monetary policy rate by 0.5 percentage points to 7.5%, the second increase in two months.

In their last meeting Sept. 4, policymakers started tightening monetary policy to address inflationary pressures brought on by currency depreciation and pledged to continue doing so until pressure on the exchange rate was eliminated.

Since then, the nominal effective exchange rate of the lari has remained undervalued and pressure on inflation has persisted, the central bank said.

The central bank expects that the improvement in the country's trade balance in August, in addition to a tighter monetary policy stance, will strengthen the exchange rate and temper inflation in the medium term.

As of Sept. 25, US$1 is equivalent to 2.97 Georgian lari.