NBG Keeps Key Refinancing Rate Unchanged at 8%
The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) has decided to keep the key refinancing rate unchanged at 8%, where it has stood since May 2024. The Committee said that it stands ready to maintain a “tight stance” should “inflationary shocks” from the ongoing “geopolitical situation” persist.
In March 25’s statement, the National Bank pointed to “heightened geopolitical tensions” in the Middle East and “substantial disruptions” to transit through the Strait of Hormuz, saying the temporary disruption of traditional supply chains resulted in a “marked increase” in energy and shipping costs on international markets. It warned that if these dynamics persist, “they could increase the risk of inflationary processes becoming more broad-based globally.”
According to the NBG, before “the escalation of geopolitical tensions,” inflation dynamics were broadly in line with its core scenario, which projected a return to the 3% target from the second quarter of 2026. Citing that inflation in February stood at 4.6%, the Bank said that “the contribution of food prices to inflation has begun to moderate,” while measures of sticky prices and inflation expectations remain “broadly anchored around the target.”
“Amid ongoing geopolitical developments, the recent rise in oil prices has already been partially transmitted to the Georgian market and is expected to push headline inflation higher in March,” the Bank said, adding that inflation will likely exceed its central scenario in the short term, while the medium-term outlook “largely depends on the intensity and persistence of global inflationary pressures,” which remain highly uncertain.
The Committee outlined two alternative scenarios that could shape future monetary policy decisions.
In a high-inflation risk scenario, sustained high levels of energy prices could increase global shipping and production costs, “generating additional supply-side shocks.” The NBG warned that “successive shocks” could increase the risk of second-round inflationary effects. In such a case, tighter monetary policies in advanced economies could trigger capital outflows from emerging markets, increasing imported inflation in Georgia. “Should these risks materialize, fundamental processes would necessitate a higher trajectory for the monetary policy rate,” the Bank said.
In a low-inflation risk scenario, the Bank said pressures could prove temporary if “disruptions in the Strait of Hormuz are resolved relatively quickly, and supply from other oil-producing countries increases,” leading to a decline in energy prices. It added that if Georgia’s “sovereign risk premium remains low for an extended period, the external balance could further improve, exerting downward pressure on inflation,” noting that “the realization of low inflation risks would imply the possibility of easing the monetary policy stance.”
“As a result of the ongoing macroeconomic analysis and consideration of existing risks, the MPC considered it optimal to leave the monetary policy rate unchanged at 8 percent,” the NBG said.
The central bank added that it will continue to “actively monitor” ongoing geopolitical developments, amid “heightened uncertainty” and their “transmission” to Georgia’s domestic market. It reiterated that it is prepared to maintain the current tight stance longer than expected and “if necessary, to tighten it further.”
The next Monetary Policy Committee meeting is scheduled for May 6, 2026.
Also Read:
- 25/02/2026 – National Bank Says It Purchased $86.6 Million in Foreign Currency in January
- 11/02/2026 – NBG Keeps Key Refinancing Rate Unchanged at 8%