National Bank of Georgia Holds Policy Rate at 8.25%

The Monetary Policy Committee of the National Bank of Georgia (NBG) left the monetary policy rate unchanged at 8.25% on July 29, citing inflation still above target and elevated inflationary risks even as economic activity remained resilient; after raising the rate by 25 bp to 8.25% in May from 8.0%, the NBG has kept it unchanged since June. June headline inflation stood at 5.8%, above the 3% target, mainly due to higher energy prices, while core inflation was 3.2% and services inflation accelerated to 4.1%, indicating that second-round risks remain noteworthy despite sticky inflation staying close to target. In the NBG’s updated central scenario, energy prices remain a significant contributor to inflation this year, average inflation is projected at 5.2% in 2026, and inflation is expected to decline gradually from the second half of 2026 and converge to target over the medium term. Economic growth stayed strong at 6.4% in May and 7.8% on average in the first five months of the year, and the 2026 growth forecast was left unchanged at 6.5%, with growth driven mainly by high-productivity, service-oriented sectors that mitigate demand-side inflationary pressures. The NBG said renewed escalation of geopolitical tensions in the Middle East had increased volatility in international oil prices, though current market trends indicate prices remain below levels seen during the previous escalation, and it signalled that the tightened policy stance is likely to be maintained for an exten