Growth in Monetary Policy Rate will Preclude Drop in GEL-denominated Loan Interest Rates

The National Bank of Georgia (NBG) has increased the monetary policy rate to 6.25 percent from 5 percent amid the inflation rate deterioration in the aftermath of the quick rise in money supply and the drop in the GEL exchange rate, economic expert Merab Kakulia told GBC.

Previously, NBG expected the inflation rate to record 6 percent, but now the price growth rate seems to be higher, he added.

Kakulia said the rise in base rate aims at tightening the currency-credit policy and this may increase interest rates on GEL-denominated loans.

The monetary policy rate upturn will influence the interbank credit market and GEL-denominated credit interest rates may not increase, but they will not decrease either.

The rise in monetary policy rate will make no effect on foreign currency denominated loans.