The National Bank of Georgia’s Monetary Policy Report sets out a decision to keep the policy rate at 8.25% while revising its projected path upward amid increased inflation risks. Monetary policy will remain tight to limit rising inflation expectations and second-round effects, supporting a return to the 3% inflation target once the supply shock fades. The updated central scenario assumes heightened geopolitical tensions in the Middle East persist through the fourth quarter of 2026. Higher energy prices are projected to push average inflation to 5.4% in 2026. Inflation is then expected to decline significantly from the second quarter of 2027 and approach the target. Alternative scenarios illustrate how developments could change the policy response. A longer and more severe geopolitical conflict, supply chain disruptions and costlier transport routes would increase inflation pressures and require additional tightening for longer. Faster de-escalation, full domestic transmission of lower global oil prices and sustained strong productivity growth would ease those pressures. The future rate path will depend on how external shocks affect Georgia’s economy. Rising inflation expectations and stronger second-round risks would call for moderate rate increases, while a clear decline in those risks and faster, sustained convergence toward the inflation target would create room for gradual policy normalization.
National Bank of Georgia holds policy rate at 8.25%, revises projected rate path upward as inflation risks rise
The National Bank of Georgia kept its policy rate at 8.25% but raised the projected rate path as inflation risks increased. Its central scenario puts average inflation at 5.4% in 2026, followed by a significant decline toward the 3% target from the second quarter of 2027. Further tightening would depend on rising inflation expectations and second-round risks, while faster, sustained disinflation would allow gradual policy normalization.