National Bank of Georgia Holds Key Rate Steady

The National Bank of Georgia held its key policy rate steady at 8.0% during its March 2026 meeting, signaling a cautious stance amid heightened tensions in the Middle East. Policymakers noted that prior to the escalation of the war, inflation was broadly aligned with the NBG’s baseline scenario, which projected a return to the 3% target from the second quarter of 2026 as temporary factors subsided. Annual inflation slowed to 4.6% in February from 4.8% in January. However, the surge in oil prices has already begun to filter through to the Georgian market and is expected to push headline inflation higher in March. The central bank noted that inflationary shocks stemming from the geopolitical situation persist and/or their scale increase the risks of second-round effects, it is prepared to maintain the current tight policy stance for longer than anticipated and, if necessary, implement further tightening.

The National Bank of Georgia kept its policy rate unchanged at 8.0% at its February 2026 meeting, maintaining a moderately tight stance amid persistent inflation pressures. Annual inflation stood at 4.8% in January, driven mainly by food prices, while core inflation remained within target at 2.1% and services inflation edged up to 3%. The NBG noted that rigid price measures rose moderately, increasing risks to inflation expectations, prompting a slight upward revision to its 2026 inflation forecast. Still, inflation is expected to gradually approach the 3% target from the second quarter and average 3.7% this year. Economic growth is projected at 5% in 2026 as activity returns to its long-term trend and credit expansion stabilizes. The MPC highlighted both upside risks from global commodity prices and geopolitical tensions and downside risks from a weak dollar, lower oil prices, and domestic labor market trends, reiterating that future policy moves will depend on incoming data.

The National Bank of Georgia maintained its policy rate at 8% during its December 2025 meeting, reflecting a measured approach amid lingering inflation pressures. Inflation slowed to 4.8% year-on-year in November, while core and service sector inflation remained near target at 2.3% and 2.6%, respectively. Rising food prices continue to influence headline inflation, though these effects are expected to be temporary. The NBG forecasts that inflation will average around 4% this year and gradually ease toward 3.5% in 2026. Economic activity is steadily returning to its long-term potential, helping to ease demand-side price pressures. Considering both upside risks from global commodity prices and geopolitical tensions and downside risks from a softer USD, falling international food prices, and domestic labor market developments, the Monetary Policy Committee deemed it appropriate to maintain a moderately tight monetary policy stance.