- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 8.25%
The National Bank of Georgia’s Monetary Policy Committee held the monetary policy rate at 8.25%, maintaining a moderately tight stance as supply-side inflation pressures persist despite moderate effects on inflation expectations. The rate had been held at 8% before a 25-basis-point increase in May and has remained at 8.25% since. Headline inflation was 5.6% in August, driven largely by higher energy prices and intensifying international food-price pressures, while average inflation is projected at around 5.2% in 2026 before gradually converging to the 3% target over the medium term. Economic growth remained strong, averaging 7.9% in the first seven months, with high-productivity sectors partly offsetting demand-side inflation pressures. Renewed Middle East tensions have increased uncertainty over energy supplies and international price volatility, raising the risk that prolonged shocks generate second-round effects. The committee signalled moderate further rate increases if supply shocks lift inflation expectations, followed by gradual policy normalization once the inflationary 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.