- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate (refinancing rate)
- 8%
The National Bank of Georgia (NBG) kept its refinancing rate unchanged at 8.0 percent on 29 January 2025, citing still-subdued inflation and resilient economic activity as grounds for a measured approach to further policy normalisation. Headline inflation has run below the 3 percent target since early 2023 and measured 1.9 percent y/y in December, while prices of domestically produced goods and services rose 2.2 percent; real GDP expanded by an average 9.4 percent over January–November 2024 as higher potential output tempered demand-driven pressures. Lower global fuel prices continue to ease costs, but rising international food prices and heightened geopolitical uncertainty present upside and downside inflation risks. The committee signalled that, once risks recede, it intends to “gradually” guide the policy rate toward an estimated neutral level of 7 percent and will adjust its stance if incoming data point to either stronger or weaker price pressures.
Rate evolution
From June 2025 to September 2026, the National Bank of Georgia kept the policy rate at 8.0% for most of the period before raising it by 25 basis points to 8.25% in May 2026 as external inflation shocks intensified, and it left the rate unchanged on June 17, July 29 and September 9. It judged a moderately tight stance appropriate because inflation remained above the 3% target, with headline inflation at 5.6% in August as energy and international food price pressures persisted, while core inflation stood at 3.6% and services inflation at 4.4%, suggesting a moderate impact on inflation expectations. Economic activity remained strong, with growth at 8.0% in July and averaging 7.9% in the first seven months of 2026, while high-productivity sectors partly offset demand-driven inflationary pressures.
Risks were initially framed as two-sided, with upside threats from tariffs, tensions in the Middle East, oil prices and supply disruptions offset by a weak U.S. dollar, lower imported inflation, productivity gains and labour-market disinflation, but from late 2025 the National Bank of Georgia said upside risks were more pronounced. After Strait of Hormuz disruptions shifted the outlook into a high-inflation risk scenario in March 2026, it tightened in May and subsequently held the rate as renewed Middle East tensions increased uncertainty over energy supplies and raised the risk that prolonged supply shocks would affect inflation expectations and amplify second-round effects. Its central scenario projected average annual inflation of around 5.2% in 2026 and a gradual return to the 3% target over the medium term, while the National Bank of Georgia signalled further moderate increases if inflation expectations rose and gradual policy normalization once the inflationary shock dissipated.