The National Bank of Georgia has kept its refinancing rate unchanged at 8%, the bank said in a statement on Wednesday.
Annual inflation in Georgia rose to 4.8% year-on-year in January up from 3.9% the previous quarter. The bank said higher-than-target inflation continues to be largely driven by food prices. Rising prices on international markets for certain commodity groups — which carry significant weight in Georgia’s consumer basket — are being transmitted to the domestic market. Alongside external factors, one-off price adjustments for certain domestic products and volatility in agricultural prices are also putting upward pressure on inflation.
At the same time, core inflation — excluding food, energy, and tobacco — remained close to its target of 2.1% in January, indicating stable long-term inflation expectations. Service-sector inflation, characterised by relatively sticky price adjustments, increased slightly to 3%. Measures of sticky price indices suggest inflationary pressures remain limited in breadth, although the moderate month-on-month increase raises the risk of an upward shift in expectations.
‘For 238,380 borrowers, monthly loan payments will not change’, said Giorgi Kepuladze, head of Society and Banks, a local NGO.
According to the central bank’s updated central scenario, the inflation forecast for 2026 has been revised slightly upward. Current inflation dynamics are still assessed as temporary and are not expected to generate second-round effects, meaning price pressures are not spilling over broadly to other goods and services. As temporary factors fade, inflation is expected to gradually converge toward the target from the second quarter of 2026, averaging 3.7% for the year.
The bank also said GDP growth is expected to return to its long-term trend, projecting 5% expansion in 2026.
Given high uncertainty, upside risks to inflation are more pronounced, although downside risks remain. The national bank’s Monetary Policy Committee considered both high and low inflation scenarios alongside the central scenario, incorporating risks operating in different directions into its decision-making.
Under a low-inflation scenario, risks could allow a faster reduction in the policy rate than in the central scenario. Sustained growth in high-productivity sectors could accelerate potential growth, strengthening the supply side and exerting disinflationary pressure. Domestic labour market developments are currently putting downward pressure on prices, supporting the likelihood of such a scenario. Externally, a prolonged weak US dollar and declining global oil prices would also weigh on headline inflation.
Following its macroeconomic analysis and assessment of these scenarios, the Monetary Policy Committee judged it optimal to maintain a moderately tight monetary stance and keep the rate at 8%. Future decisions will depend on incoming data and risk developments. Under the central scenario, the National Bank will continue policy normalisation only after one-off factors dissipate and inflation converges to target. If inflation remains above target for an extended period, the committee stands ready to maintain the current stance longer than expected and tighten further if necessary.
The next Monetary Policy Committee meeting is scheduled for 25 March 2026.
