- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate (refinancing rate)
- 8%
The Monetary Policy Committee of the National Bank of Georgia (NBG) on 10 September 2025 left the refinancing rate unchanged at 8.0 percent, judging that a “moderately tight” stance remains appropriate while headline inflation, at 4.6 percent y/y in August versus the 3 percent target, is being pushed up by volatile food costs even as core inflation stands lower at 2.8 percent. The policy rate has been kept at 8 percent since at least January 2025. The NBG noted that economic growth slowed to 6.5 percent in July, signalling a gradual return toward potential, aided by tighter financial conditions, and it still expects average inflation of about 3.8 percent this year before converging to target over the medium term. Imported goods prices remain in deflation, reflecting year-on-year fuel price declines and a relatively weak U.S. dollar, but global risks are “noteworthy,” with uncertainty around U.S. tariff policy and Middle East tensions posing possible stagflationary pressures through supply-chain strains and higher oil prices. The committee reiterated its readiness to deploy all tools to keep inflation near 3 percent and said future rate decisions will be guided by updated forecasts and risk assessments.
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.