- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 8%
The Monetary Policy Committee of the National Bank of Georgia (NBG) left the refinancing rate at 8.0 percent on 5 November 2025, judging that a “moderately tight” stance remains appropriate as headline inflation, at 5.2 percent y/y in October against a 3 percent target, is driven mainly by elevated food prices while core (2.4 percent) and services (2.5 percent) inflation stay near target and demand pressures ease. The rate has been unchanged at 8 percent since at least January 2025. Tight financial conditions are helping demand converge toward potential; real GDP growth reached 7.7 percent in January-September, and imported goods prices are flat amid lower fuel costs. The central scenario now sees inflation averaging about 4 percent in 2025 before easing to 3.5 percent in 2026, but the MPC highlighted pronounced two-sided risks: global tariff disputes and geopolitical tensions could lift commodity prices, while weaker oil prices, a soft USD and benign labour-market dynamics could pull inflation lower. The committee signalled it will maintain the current stance “for longer than expected” and stands ready to raise rates if one-off price shocks persist, with future moves data-dependent.
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.