TBILISI, Aug 12 (Reuters) - Georgia’s central bank raised its key refinancing rate to 6 percent from 5.5 percent on Wednesday as part of efforts to preserve financial stability, control inflation and support the country’s lari currency.
The bank, which is due to hold its next monetary policy meeting on Sept. 23, raised its main interest rate to 5.5 percent from 5 percent in July, to 5 percent from 4.5 percent in May, to 4.5 percent from 4 percent in February and kept it unchanged in March.
Georgia’s central bank governor told Reuters on Monday the major challenge was inflationary expectations and the central bank planned to raise base interest rates step-by-step.
“We expect that the refinancing rate will be raised to 6.5 percent by the end of this year,” Georgy Kadagidze said.
“We are not considering decreasing the rates and we are not in favour of big jumps.”
The former Soviet republic’s economy has been battered by a plunge in Russia’s rouble and the conflict in Ukraine, along with declining exports and remittances from Georgians overseas and a rising current account deficit.
Inflation in the South Caucasus country stood at 4.9 percent year-on-year in July, up from 4.5 percent in the previous month and below the 6 percent rate targeted by the government for 2015. Monthly deflation in July was 0.2 percent, down from 0.02 percent inflation in June.
Georgia’s central bank has sold $200 million so far this year to support the lari. The official exchange rate for Wednesday was 2.30 lari per dollar, compared with 1.75 at the start of November. (Reporting by Margarita Antidze; Editing by Lidia Kelly)