National Bank of Georgia Holds Key Rate Steady

The National Bank of Georgia held its key policy rate steady at 8.25% at its October 2026 meeting, maintaining a moderately tight stance amid persistent inflationary pressures. Annual inflation rose to 5.6% in September, well above the bank’s 3% target, with energy prices contributing around 2 percentage points. The central bank raised its 2026 inflation forecast to 5.4% from 5.2%, while expecting inflation to average 3.5% in 2027 before gradually converging toward target from the second half of the year. Economic activity remained stronger than expected, with growth averaging 7.6% in the first eight months of 2026, prompting the bank to raise its 2026 GDP growth forecast to 7.2% from 6.5%. The bank warned that further escalation in the Middle East could push energy prices and inflation higher, potentially prompting additional rate hikes, while easing tensions and lower energy prices could allow faster monetary policy normalization.

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.