National Bank of Georgia Holds Key Rate Unchanged

The National Bank of Georgia held its key policy rate steady at 8.25% during its September 2026 meeting, maintaining a moderately tight stance amid persistent inflationary risks. Annual inflation rose to 5.6% in August, largely driven by supply-side shocks, particularly higher energy prices amid renewed geopolitical tensions in the Middle East. International food price pressures also intensified, while higher energy costs raised production and transportation expenses. However, core inflation stood at 3.6% and services inflation at 4.4%, suggesting that the impact of the supply shock on inflation expectations remains moderate. The NBG projects average annual inflation at around 5.2% in 2026 before gradually converging to its 3% target over the medium term. The central bank said it could moderately raise the policy rate if prolonged supply shocks push inflation expectations higher and generate second-round effects, while normalization would begin once the inflationary shock dissipates.

The National Bank of Georgia left its key policy rate unchanged at 8.25% at its July 2026 meeting, maintaining a cautious stance amid tensions in the Middle East. Headline inflation edged up to 5.8% in June from 5.7%, driven by higher energy prices linked to the regional conflict. Policymakers noted the increase was broadly in line with expectations for the second quarter, while emphasizing that second-round inflationary effects remain a key concern. Meanwhile, economic activity accelerated to 9.0% year-on-year in the first quarter from 6.7% in the previous quarter, supported by strong performance in service sectors, with the negative impact of the conflict remaining limited. The central bank continues to forecast economic growth of 6.5% in 2026 and revised its average inflation projection up to 5.2% from 4.9%, beginning to ease in the second half of the year and gradually converge to target over the medium term. Future decisions will depend on inflation risks and second-round effects.

The National Bank of Georgia held its key policy rate steady at 8.25% during its June 2026 meeting, noting global uncertainty despite signs of improved sentiment. Headline inflation increased to 5.7% in May, significantly above the central bank’s target of 3%, primarily driven by higher energy prices and ongoing supply chain disruptions. Inflation is expected to remain elevated during the second quarter of the year, averaging 4.9% in 2026. Economic activity remains robust, expanding by 6.2% in April and averaging 8.3% growth overall. However, global uncertainty continues to pose risks to the outlook. An escalation of geopolitical tensions would likely drive commodity prices higher, keeping inflation above target for a longer period. Conversely, stable commodity prices contribute to a faster moderation of inflationary pressures. Future decisions will regard current geopolitical tensions, continuing to moderate in case of prolonged conflict and normalization may proceed if tensions ease.