Georgia holds rate, past cuts still not fully reflected

    Georgia's central bank held its policy rate steady at 3.75 percent, saying that the impact of easier monetary policy in the last few years has not yet been fully reflected in the real economy so it would leave its rates unchanged.
    The National Bank of Georgia (NBG) has cut rates 150 basis points this year, most recently in August, for a total reduction of 425 basis points since it began easing in July 2011. At its previous meeting in September, the bank also said it the full impact of its rate cuts were not yet fully reflected in the economy.
    The NBG also repeated that inflation is expected to remain low and first return to the bank's 6.0 percent target by the end of 2014.
    Georgia's inflation rate was a positive 0.2 percent in October, reversing three consecutive months of deflation due to higher prices for seasonal products.
    Economic activity improved in the third quarter but the output gap remains negative, keeping prices in check, the bank said, adding that the output gap is expected to close gradually in the fourth quarter, which should help bring inflation closer to the bank's target.
    Georgia's Gross Domestic Product rose by an annual 1.5 percent in the second quarter, down from 2.4 percent in the first quarter.

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