The Monetary Policy Committee of the National Bank raised the refinancing rate by 0.5% to 10% making the lari-denominated loans expensive for more than 140,000 consumers. The refinancing rate has not been double-digit since October 2008.
Mortgage loans expressed in the national currency are mainly tied to the refinancing rate. From the beginning of the year to date, the rate has increased by a total of 2 percentage points in three stages.
One day before an increase in the refinancing rate, it was reported that the annual inflation in July reached a 10-year high of 11.9% that is 4-fold higher than the central bank’s initial target and 1.8 times higher than the adjusted rate.
NBG says in order to prevent price hikes caused by temporary factors not to have a long-term effect on inflation expectations, the National Bank will pursue a strict policy for a long time and / or, if necessary, will further tighten it. It is projected that inflation will begin to decline in 2022 and gradually approach its medium-term target.