- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate (refinancing rate)
- 8%
The Monetary Policy Committee of the National Bank of Georgia on 30 July 2025 left the refinancing rate at 8.0 percent, judging this “cautious” pause appropriate as June headline inflation quickened to 4 percent—above the 3 percent target on food-driven base effects—while service-sector inflation held at 2.3 percent and core inflation has stayed below target for almost two years. The decision prolongs the steady 8 percent policy stance maintained since at least January 2025. Inflation is projected to average 3.8 percent in 2025 before returning to target, and import prices remain in deflation thanks to cheaper fuel. Real GDP expanded 8.8 percent year-on-year in the first five months, prompting an upward revision of the 2025 growth forecast to 7.4 percent. The Committee flagged two-sided risks: higher global food and energy costs or renewed US tariff actions and Middle-East tensions could require a steeper tightening path, while sustained productivity gains, a weaker USD and further falls in international food prices could justify earlier easing. Future rate moves will hinge on updated forecasts and risk assessments, with the central bank reiterating its commitment to maintain medium-term inflation 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.