President of the National Bank of Georgia Natia Turnava has said the decision to raise the refinancing rate was “clearly preventive” and aimed at containing inflationary risks linked to global market instability.
Speaking after the Monetary Policy Committee’s meeting, Turnava noted that inflationary pressure in Georgia is being driven largely by external factors, particularly rising oil product prices amid ongoing tensions in the Middle East.
“If we look at the inflation rate in Georgia in April, there were largely effects coming from external markets, from the prices of oil products, which made a very large contribution to inflation,” Turnava said.
She claimed that the National Bank is focused on managing inflationary expectations and preventing external price shocks from creating long-term inflationary pressure in the domestic economy.
Turnava stressed that the risks are especially significant for Georgia as an importer of oil products, adding that uncertainty surrounding the ongoing conflict in the Middle East makes future price developments difficult to predict.
“No one knows how long the ongoing conflict in the Middle East will last and what the subsequent price fluctuations in external markets will be,” she said.
The National Bank chief explained that the refinancing rate was increased by 0.25 percentage points to 8.25% as a precautionary step intended to stabilize inflation expectations and maintain price stability.
“This is to prevent inflationary pressure and inflationary risks from being passed on to us,” Turnava stated, adding that the central bank aims to ensure inflation gradually returns to its 3% target once external pressures ease.
Earlier on Wednesday, the Monetary Policy Committee of the National Bank of Georgia announced the increase in the refinancing rate from 8% to 8.25%.
