The National Bank of Georgia (NBG) held its monetary policy rate at 8.25%, maintaining a moderately tight stance to contain risks to inflation expectations and second-round effects amid persistent supply pressures and stronger-than-expected growth. The rate has remained unchanged since a 25-basis-point increase from 8% in May. The NBG raised its central inflation forecast for 2026 to 5.4%, with inflation expected, all else equal, to gradually converge toward the 3% target from the second half of 2027. Core and services inflation remained below headline inflation, indicating that the supply shock’s impact on expectations was still moderate. The NBG also raised its 2026 growth forecast to 7.2%, noting that high-productivity sectors continued to drive activity and offset demand-side inflationary pressures. Prolonged Middle East tensions, higher energy prices and disruptions to international shipping continued to increase production and transportation costs. The central bank signalled further moderate rate increases if the prolonged supply shock pushes inflation expectations upward and amplifies second-round effects, followed by gradual policy normalization once the inflationary shock dissipates.
National Bank of Georgia Holds Policy Rate at 8.25%
The National Bank of Georgia held its monetary policy rate at 8.25% amid persistent supply pressures and raised its 2026 inflation forecast to 5.4%. Inflation is expected to gradually converge towards the 3% target from the second half of 2027, with further moderate rate increases possible if the prolonged supply shock raises inflation expectations and amplifies second-round effects.