The National Bank of Georgia kept its monetary policy rate at 8.25% as prolonged supply disruptions linked to tensions in the Middle East sustained inflationary pressure. Its updated central forecast raises projected inflation for 2026 by 0.2 percentage points to 5.4%. The moderately tight policy stance aims to limit the risk of rising inflation expectations and second round effects while inflation remains above the 3% target. Annual inflation reached 5.6% in September, with energy prices contributing about 2 percentage points. Higher energy costs and international shipping disruptions are also pushing up production and transport costs, adding indirect pressure on other prices. Core inflation of 3.5% and services inflation of 3.7% suggest that the impact on inflation expectations remains moderate, although the prolonged shock increases that risk. Under the central forecast, inflation will gradually approach the target from the second half of 2027 and average 3.5% that year. Economic activity has been stronger than expected, prompting an increase in the 2026 growth forecast to 7.2% from 6.5%, with growth of around 5.5% expected in 2027. Growth remains concentrated in highly productive sectors, offsetting inflationary pressure from demand. The policy outlook depends on how supply pressures and inflation expectations evolve. Further escalation and prolonged conflict in the Middle East could require additional tightening and a longer period of restrictive policy. Conversely, de-escalation and sustained productivity gains could allow faster policy normalization. If the prolonged supply shock produces an upward trend in inflation expectations and strengthens second round effects, the committee would pursue moderate rate increases. Gradual normalization would begin once the inflation shock dissipates. The next policy meeting is scheduled for Dec. 16, 2026.
National Bank of Georgia holds policy rate at 8.25%, raises 2026 inflation forecast to 5.4%
The National Bank of Georgia left its policy rate unchanged at 8.25% and increased its 2026 inflation forecast to 5.4% as energy costs and shipping disruptions prolonged price pressures. Inflation is projected to approach the 3% target gradually from the second half of 2027, while the 2026 economic growth forecast rose to 7.2%. Further moderate rate increases remain conditional on rising inflation expectations and stronger second round effects, with gradual normalization to begin once the inflation shock dissipates.