According to the NBG statement, given current geopolitical circumstances, uncertainty is still high and risks to inflation are mostly on the upside. 

“The Russia-Ukraine war and the accompanying sanctions imposed on Russia have significantly increased migration flows into Georgia, boosting aggregate demand. According to preliminary estimates, economic growth in October was 8.3 percent while averaging 10.0 percent in the first ten months of 2022. According to the NBG’s estimates, the current level of economic activity exceeds its potential level, which hinders the slowdown in inflation even with the strengthening of the lari exchange rate as a result of foreign inflows.

In response to these risks, the NBG maintains a tight monetary policy. As a result of the tight monetary policy and the recently implemented macroprudential measures, credit growth continued to decelerate. It is expected that these dynamics will persist in the future. At the same time, since the NBG maintains the remuneration on reserve requirements in the US dollar and Euro fixed at 0 percent, the gradual tightening of monetary policies by the European Central Bank and the Federal Reserve further strengthens the effects of the policy tightening on foreign currency loans in Georgia. It is expected that the annual inflation will continue a gradual decline and will approach the target level in the second half of 2023,” the NBG declared. 

The next meeting of the Monetary Policy Committee will be held on February 1, 2023.