- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate (refinancing rate)
- 8%
The Monetary Policy Committee of the National Bank of Georgia on 12 March 2025 left the refinancing rate at 8.0 percent, judging that headline inflation at 2.4 percent in February—still below the 3 percent target but edging higher on rising global food prices and fading base effects—remains on course to converge to target in H1-2025 before a temporary overshoot. After also holding the rate at 8 percent in January, the Committee reiterated a cautious stance on normalisation. Core inflation is 2.0 percent and inflation for domestically produced items is at the 3.0 percent target, while preliminary data show vigorous economic activity with January GDP up 11.1 percent year on year, supported by strong business-loan growth. The bank noted that a weaker USD is buoying the lari and should damp imported-price pressures, yet global tariff-related uncertainty and potential supply-chain disruptions could rekindle inflation, justifying vigilance. Policymakers said future moves will hinge on updated projections and risk assessments and pledged to use all tools to keep inflation close to target, with the next rate review set for 7 May 2025.
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.