“We are committed to stabilising and normalising inflation expectations to prevent any future upward pressure and to ensure a stable price level,” said Natia Turnava, President of the National Bank of Georgia (NBG).

She also confirmed that the NBG has decided to raise the refinancing rate.

“There is heightened uncertainty and geopolitical tension worldwide, with particular inflationary pressures arising from the global oil and oil products markets. For instance, if you examine Georgia’s April inflation rate, it is evident that external market factors, especially oil and oil product prices, have played a significant role in driving inflation.

Consequently, we are focusing on better managing inflation expectations. These risks and expectations are well understood globally, including in Georgia, which relies on importing oil and oil products.

No one can predict how long the ongoing conflict in the Middle East will last or how much volatility there will be in external markets. Therefore, we have decided to increase the refinancing rate, our monetary policy rate, even by a small percentage. This is a clear preventive measure designed to counteract inflationary pressures and the risk of their transmission to our economy.

In essence, this move is about safeguarding inflation expectations, preventing future inflationary pressures, and maintaining price stability. Our goal is to ensure that, at the earliest opportunity, our inflation rate gradually returns to the target of 3.0 per cent, as initially planned before the conflict in the Middle East and rising oil prices impacted the market,” Turnava explained.