At its meeting on June 17, 2026, the Monetary Policy Committee of the National Bank of Georgia decided to keep the monetary policy rate (refinancing rate) unchanged at 8.25%. According to the released data, annual inflation stood at 5.7% in May.
The regulator noted that inflation exceeding the 3% target is mainly driven by a significant rise in energy prices. This inflationary pressure is primarily linked to external factors, including high volatility in global energy prices and supply disruptions.
At the same time, core inflation indicators remain below headline inflation:
- core inflation (excluding food, energy, and tobacco products) stood at 3.5% in May;
- inflation in the services sector was 3.8%.
The National Bank warns that the dynamics of these indicators point to a risk of stronger “second-round effects,” where initial price increases begin to spread to other sectors of the economy.
At the same time, a notable correction in energy prices has recently been observed in international commodity markets. Amid growing optimism over a potential peace agreement between the US and Iran, global oil prices have decreased significantly from their peak levels.
According to the National Bank’s forecast, pressure from external inflationary factors will peak in the second quarter of 2026, after which it will begin to gradually subside. Under the baseline scenario:
- average inflation in 2026 will be 4.9%;
- in the medium term, it will gradually return to the 3% target.
Meanwhile, economic activity in the country remains high. In April 2026, Georgia’s economy grew by 6.2%, with average growth for the first four months of the year reaching 8.3%. The National Bank emphasizes that high-productivity sectors continue to make a significant contribution to economic growth, partially offsetting demand-side inflationary pressures.
According to the regulator’s assessment, the level of global uncertainty remains high. The main risks are:
- further development of the conflict in the Middle East;
- the dynamics of global energy prices;
- the timeline for restoring infrastructure damaged by hostilities.
The Committee considered both a high-inflation scenario and a scenario of a more rapid decline in inflation.
In the event of a worsening geopolitical situation, new infrastructure damage, and a further rise in global commodity prices, inflation could exceed the baseline forecast. In this case, a tighter monetary policy and a potential rate hike would be required.
Conversely, if a peace agreement is reached in the Middle East and commodity prices quickly stabilize, inflation could decline faster than expected. In this scenario, the National Bank will be able to begin normalizing its monetary policy sooner.
The next meeting of the Monetary Policy Committee will be held on July 29, 2026.
