September 4, 2019 / 9:14 AM / 17 days ago

UPDATE 1-Georgia's central bank raises key rate to 7% from 6.5%

(Adds details, context)

TBILISI, Sept 4 (Reuters) - Georgia’s central bank raised its key refinancing rate to 7% from 6.5% on Wednesday, after annual inflation exceeded its 3%target.

The central bank had cut the rate to 6.75% in January and to 6.50% in March and left it unchanged since then.

Annual inflation in August stood at 4.9%, up from 4.6% in July. Month by month, prices rose 0.8% in August after declining 0.02% in July.

The central bank said the increase in annual inflation was mainly caused by an increase in excise taxes and by depreciation of the national currency against the U.S. dollar.

“The current depreciation of nominal effective exchange rate exacerbates inflationary expectations,” the bank said in a statement.

The central bank said at the end of July that it might tighten monetary policy to cut inflationary risks, as the country’s currency fell to a record low against the dollar.

It said the exchange rate has reached a benchmark “that may jeopardize price stability” after the lari fell to 2.9718 to the dollar.

The bank is due to hold its next policy meeting on October 23. (Reporting by Margarita Antidze; editing by Larry King)

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