- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 8.25%
The National Bank of Georgia (NBG) left its refinancing rate unchanged at 8.25% on June 17, saying that although inflation has risen on external energy-price pressures and sticky-price measures have edged up, its central scenario still sees inflation resuming a decline from the second quarter of 2026, averaging 4.9% in 2026 and gradually returning to the 3% target in the medium term. May annual inflation was 5.7%, with core inflation at 3.5%, and the NBG said recent energy-price corrections were consistent with its baseline even as second-round inflation risks persist. Economic activity remained strong, with growth at 6.2% in April and 8.3% on average in the first four months of the year, driven in part by high-productivity sectors. Georgia’s external position was described as robust, with strong FX inflows, a low sovereign risk premium supporting real effective exchange rate stability, and a relatively weak USD in global markets adding support to imported inflation. The NBG said global uncertainty remains high because of the conflict in the Middle East, international energy prices and the timeline for restoring damaged infrastructure, and it signalled that it would moderately raise the policy rate if geopolitical inflation shocks become more prolonged or intensify second-round effects, before gradually normalising policy once the shock dissipates.
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.