As the COVID-19 outbreak pushed up the price of oil and gas imports, Georgia's National Bank increased its main refinancing rate to 10.5% from 10%, the highest since 2008.

The monetary policy committee of the central bank hiked the rate to 10% from 9.5% in August and held it stable in September and October.

For several months, inflation has surpassed the central bank's 3% objective. In November, annual price rise was 12.5%, down from a record high of 12.8% in October. Consumer prices rose 0.6% month over month in November, following a 1.3% increase in October this year, and compared to 0.9% inflation in November 2020.

The central bank attributed the rise in inflation to temporary external factors, such as an increase in consumer commodity prices on overseas markets and the utilities tax subsidies.

The bank said in a statement that "it will have a transient increased contribution to the annual inflation rate in December 2021 and January-February 2022."

Annual inflation is likely to rise momentarily in the coming months owing to the base impact of the electricity bill subsidies, but it will begin to fall in the spring, according to the bank.

"Planned fiscal consolidation and tighter monetary policy will allow the steady lowering of inflation, as well as the fading-out of one-off variables," the bank stated.

"Significantly lower inflation and inflationary expectations will be a requirement for further policy rate reductions."

Georgia's GDP increased by 10.5% year over year in January-October, after shrinking by 5.1% in the same period the previous year. The economy grew by 6.9% in October alone, compared to a 3.9% drop a year before. Except for construction, all sectors of the economy grew.

Georgia increased its economic growth prediction for 2021 from 4.3% to 7.7%, in accordance with the International Monetary Fund's (IMF) current projection amid signs of economic improvement.

Georgia's long-term foreign-currency Issuer Default Rating (IDR) was confirmed at 'BB' by Fitch Ratings in August, with the outlook changed from Negative to Stable.

The monetary policy committee of the central bank will meet next on February 2, 2022.