Georgia Hikes Policy Rate to 8.25%

The National Bank of Georgia lifted its key policy rate by 25 bps to 8.25% at its April 2026 meeting, the first hike since March 2022, taking borrowing costs to their highest level since 2024. Policymakers said the decision is aimed at maintaining inflation expectations stable at the target rate in the face of a supply-side shock from the Middle East conflict. They added that the moderate tightening of monetary policy should also help reduce the risk of second-round effects and ensure inflation returns quickly to the 3% target once the shock fades. The inflation rate in Georgia quickened to 5.9% year-on-year in April 2026, the highest level since February 2023, from 4.3% in the previous month. Meanwhile, the central bank noted that the economy continues to show resilience, with growth remaining robust despite ongoing risks. According to preliminary data, economic activity grew by 10.7% in March 2026 and by 9.1% in the first quarter.

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.