NBG Keeps Refinancing Rate at 8.25%, Raises 2026 Inflation Forecast to 5.4%

The National Bank of Georgia (NBG) kept its key refinancing rate unchanged at 8.25% after its Monetary Policy Committee (MPC) meeting on October 21, while raising its inflation forecast to 5.4% and economic growth projection to 7.2% for 2026.

In its October 21 statement, the Bank noted that annual inflation stood at 5.6% in September, attributing the increase largely to external factors, noting that “geopolitical tensions in the Middle East have persisted longer than anticipated, prolonging the supply-side shock and, consequently, increasing inflationary pressures.”

The bank also warned that disruptions to international transportation and shipping, “coupled with higher energy prices, are increasing production and transportation costs, creating additional inflationary pressures through indirect effects on the prices of other goods and services.”

Although core inflation stood at 3.5% and services inflation at 3.7%, both below the headline rate, the NBG cautioned that the supply-side shock on inflation should be monitored “given the prolonged nature of the shock.”

Against this backdrop, the bank revised its central inflation forecast for 2026 upward by 0.2 percentage points to 5.4%. Inflation is expected to gradually converge toward the NBG’s 3% target from the second half of 2027, averaging 3.5% that year, according to the updated forecast.

At the same time, the NBG raised its economic growth projection for 2026 from 6.5% to 7.2%, citing strong activity in “high-productivity sectors.” It noted that Georgia’s economy grew by 6.3% in August, adding that growth in 2027 is expected to be around 5.5%.

• 30/09/2026 – Georgia’s GDP Up by 6.3% in August 2026

As uncertainty surrounding the further “evolution of geopolitical developments” and the magnitude of their impact on the economy remains “elevated,” the statement said the MPC considered both high-inflation and low-inflation risk scenarios.

Under the high-inflation scenario, the NBG said a further escalation of the conflict in the Middle East would push energy prices “even higher.” It warned that “disruptions to supply chains and the shift to alternative transportation routes would increase production and transportation costs,” while heightened global inflationary pressures would spill over into the domestic economy through imported inflation and tighter global financial conditions. This, it said, could require “further monetary policy tightening” and “a restrictive stance for a longer period.”

Under the low-inflation scenario, the NBG said strong economic growth, driven largely by high-productivity sectors, would prove more persistent than previously projected, contributing to “a sustained improvement in the external position” and an upward revision to its assessment of long-term growth potential. This could support “a fundamental appreciation of the exchange rate” and limit demand-driven inflationary pressures. The scenario also envisages a de-escalation of the conflict in the Middle East, bringing lower energy prices than assumed in the central forecast. “Consequently, inflation would converge toward its target more rapidly,” the NBG said.

“Taking into account the current macroeconomic environment and prevailing risks,” the MPC therefore decided to keep the monetary policy rate at 8.25%. “Should the prolonged supply shock lead to an upward trend in inflation expectations, which would amplify second-round effects,” the bank said, it would continue “to increase the monetary policy rate moderately.”

The next Monetary Policy Committee meeting is scheduled for December 16, 2026.

Also Read:

• 16/10/2026 – Money Transfers to Georgia Down 10.1% in September Amid Drop in Russia Transactions
• 30/09/2026 – Georgia Tightens Credit Rules by Raising Income Threshold for 25% Payment-to-Income Rule
• 01/09/2026 – NBG Introduces Two-Day Wait for ‘High-Risk Transactions’ by People Over 60
  

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