NBG increased policy rate by 50 basis points to 4.5%
NBG’s monetary policy committee (on 11 Feb 2015) increased policy rate by 50 basis points to 4.5% to curb inflation expectations due to external shocks. Despite this increase, the monetary policy is still accommodative as policy rate remains below the neutral value (which is 6-7%, neither stimulating nor restraining economic growth). Annual inflation in January was 1.4% and NEER strengthened by 10% y/y, however lari depreciation against dollar affected inflation expectations. As per NBG’s current forecast annual inflation will reach NBG’s inflation target of 5.0% by the end of the year, while policy rate will be around 5.0% unless other shocks affecting the economy will not occur.
NBG sold US$ 40mn
NBG intervened the FX market on 11 February 2015 and sold US$ 40mn. As a result, lari strengthened against US dollar by 0.9% d/d on February 12.
Exports down 30.3% y/y and imports down 0.7% y/y in January 2015
Exports decreased 30.3% y/y at US$ 156mn, while imports were down 0.7% y/y at US$ 538mn in January 2015, according to GeoStat preliminary figures. As a result, trade deficit reached US$ 382mn, up by 20.1% in January 2015.
