- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 8%
The National Bank of Georgia (NBG) kept its refinancing rate unchanged at 8.0 percent at the 25 March Monetary Policy Committee meeting, citing heightened Middle-East tensions and Hormuz-related supply disruptions that have lifted global energy and shipping costs and pushed the economy into a “high-inflation risk” scenario even though February headline inflation eased to 4.6 percent and core and expectations remain near the 3 percent target. The rate has been held at 8 percent at every meeting since at least March 2025. The NBG warned that the recent oil-price spike is already feeding into domestic prices and now expects short-term inflation to rise above its central forecast before converging to target from Q2 2026, with the medium-term path hinging on the scale and persistence of external price shocks. It noted that Georgia’s sovereign risk premium remains low, partially offsetting external pressures, but flagged the danger of imported inflation and potential capital outflows should advanced-economy central banks tighten policy. The committee pledged close monitoring and said it is ready to keep the stance tight for longer or raise rates if second-round effects materialise, while allowing that rapid easing of geopolitical tensions and lower energy prices could eventually permit policy loosening.
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.