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Georgia's central bank raises key rate as inflation overshoots target

The National Bank of Georgia increased its refinancing rate by 1.0 percentage point to 8.5%, the third consecutive hike since September, when inflation overshot the central bank's target.

Georgia's annual inflation rate reached 6.4% last month, exceeding the central bank's desired level of 3%. The bank expects the rate to remain above the target in 2019.

The central bank said it will continue to tighten monetary policy until inflationary pressures caused by the declining Georgian lari subside.

"The future decisions of the [Monetary Policy Committee] will depend upon the speed of neutralization of exchange rate pressure stemming from the exchange rate depreciation," the central bank said.

Inflation is expected to decline starting in March 2020 and stay close to the target in the medium term, according to the central bank.