Finance
National Bank of Georgia Holds 8.25% Rate With 5.2% Inflation Forecast
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The National Bank of Georgia (NBG) kept its refinancing rate unchanged at 8.25% at its 29 July 2026 meeting, saying there was currently no need for further tightening even though inflation remains above its 3% target, according to Georgia Today. The bank had earlier raised the rate by 25 basis points to 8.25%, its first increase in two years, citing the situation in the Middle East.
Annual inflation was 5.8% in June, core inflation 3.2% and services inflation 4.1%. The NBG said higher energy prices linked to Middle East geopolitical tensions were the primary driver, and forecast average inflation of 5.2% for 2026 with a gradual return to 3% over the medium term. The ADB's September outlook uses the same 5.2% figure for Georgia.
On growth, the NBG recorded 6.4% in May and a 7.8% average for the first five months, and kept its full-year forecast at 6.5%, driven by service-oriented sectors. The gap between the 3.2% core reading and 5.8% headline suggests energy, not broad demand, is behind most of the overshoot.
The bank said it would maintain a tight stance for an extended period and remains prepared to raise rates if inflation risks increase. Its next scheduled meeting was 9 September 2026; this article reflects the 29 July decision, and readers should check the NBG for any later change.
For borrowers and banks, an 8.25% policy rate keeps lari funding costs elevated, which matters for corporate lending and for consumers carrying local-currency debt. For importers and exporters, energy-driven inflation is largely external, so the exchange rate and oil prices will matter more than domestic demand in determining the next move.
With growth running above 7% and core inflation near target, the central bank has room to hold. A renewed energy-price spike or a pickup in wage-driven services inflation would be the triggers that could end the pause and revive the tightening debate.
Market participants will also watch how the lari and bank credit respond. A policy rate above 8% encourages saving in local currency and tends to restrain consumer borrowing, while the strong growth reading shows demand has not weakened. Banks have therefore been operating with solid activity and a stable rate environment, though energy-price volatility remains the main external risk to the inflation outlook. For now, the central bank message is patience rather than further tightening, which gives companies some visibility on borrowing costs into the autumn.
