Georgia cuts rate 25 bps and expects to ease to 6%

    Georgia's central bank lowered its benchmark refinancing rate by a further 25 basis points to 6.75 percent as its continues to roll back its tight monetary policy stance and said it expects to cut the rate further to 6.0 percent in the medium term.
    The National Bank of Georgia (NBG) has now cut its rate by 125 basis points since April when it embarked on an easing cycle following last year's rate hikes that totaled 400 points.
    Today's rate cut follows last month's guidance that further policy softening would depend on the forecast for inflation.
    Georgia's inflation rate in June fell by more than expected to 1.1 percent from 2.1 percent in May as food prices fell more than expected amidst weak aggregate demand and declining inflation expectations.
    Foreign demand remains weak, the central bank said, with exports in the first half of the year down by 12 percent.
    The NBG targets inflation of 5 percent this year, then 4 percent in 2017 and 3 percent afterwards.
   
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