TBILISI, DFWatch–The National Bank of Georgia plans to tighten its monetary policy in case the fall in the exchange rate of lari sets off an inflation.
After falling in value for several months, the Georgian lari (GEL) is now rated at 1.7421 against the US dollar.
Giorgi Kadagidze, President of the National Bank of Georgia (NBG), said on Friday after meeting with members of the business association that the bank’s monetary policy has been mollified against the background of the deflation for the last two years.
“We have a floating exchange rate, which means that the rate is so-called automatic stabilizer of current processes in economy,” he said, adding that in addition to deflation and simplified monetary policy it was necessary to assimilate the budget deficit in the fourth quarter, which had an influence on exchange rates.
He said, if the situation turns into an inflation tendency, NBG will change its policy and make it stricter.
Kadagidze said that in this process, the most affected people are those who have loans in USD and their income is paid in GEL.