- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate (refinancing rate)
- 8%
The Monetary Policy Committee of the National Bank of Georgia (NBG) on 18 June 2025 kept the refinancing rate at 8.0 percent, arguing that inflation is close to the 3 percent target while economic activity remains strong. The stance extends an unchanged policy rate of 8 percent maintained since January 2025. Annual inflation ticked up to 3.5 percent in May, with core inflation at 2.0 percent and service-sector inflation at 2.2 percent; the NBG still expects average inflation to rise temporarily to 3.8 percent in 2025 before easing to target. Real GDP grew 8.8 percent year-to-date through April and credit growth has aligned with its equilibrium pace. Deflation in imported goods, reflecting lower fuel prices and a stronger lari amid a weaker USD, is offsetting food-price pressures. Policymakers flagged elevated global uncertainty, higher oil prices and increasing trade fragmentation as upside risks, but also saw potential disinflation if lower food commodity prices and currency strength persist. The committee reaffirmed a cautious approach to further normalisation, with future rate decisions contingent on updated forecasts and risk assessments, and pledged to deploy all available tools to maintain medium-term price stability around the 3 percent target.
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.