Georgia holds rate, may hike on persistent inflation

      Georgia's central bank left its policy rate steady for the second month but said it may return to the monetary tightening path as the risks of higher inflation persists along with a threat of rising inflation expectations.
       The National Bank of Georgia (NBG) kept its refinancing rate at 10.0 percent, as in September, after raising it by 2 percentage points earlier this year following hikes in March, April and August.
      Today's warning about future rate hikes comes after the bank's monetary policy committee last month said inflation will decline significantly from the spring of 2022 as temporary factors pushing up inflation fade while the monetary policy stance remains tight along with fiscal consolidation.
      The central bank reiterated today that it still expects inflation to ease in the spring of 2022 although the base effect of utility fee subsidy program will push up inflation in December this year, and the first two months of next year.
    "Nevertheless, in the face of strong supply shocks, the threat of inflation expectations accelerating is still relevant," NBG of said, adding:
     "In addition, inflationary risks persist and the materialization may warrant further tightening of monetary policy."
     Georgia's inflation rate eased to 12.3 percent in September from 12.8 percent in August, four times the bank's target of 3.0 percent.

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