National Bank of Georgia again holds refi rate at 8%, worsens inflation outlook

TBILISI. Nov 5 (Interfax) - The National Bank of Georgia's Monetary Policy Committee at a meeting on November 5 decided for the seventh time this year to hold the monetary policy or refinancing rate at 8% per annum, the NBG said in a press release.

The regulator considered it optimal to maintain a moderately tight monetary policy stance and said upcoming rate decisions would "depend on updated data and the realization of risks."

As inflation quickens, the NBG "stands ready to maintain the current tight stance for longer than expected and, if necessary, to tighten it further."

The NBG's inflation forecast has been revised from 3.8% to 4% in 2025, the target being not more than 3%. Inflation could slow to 3.5% in 2026.

The acceleration of inflation is being driven mainly by food prices, which are responsible for high inflation expectations, but "elevated food prices are expected to have only a temporary impact on inflation, with their effects gradually fading," the NBG said.

The NBG said economic activity was gradually converging toward its long-term potential, thereby moderating demand-side pressures on prices. In January-September 2025 economic growth amounted to 7.7%, which the regulator said was in line with its long-term trend.

As for the influence of external factors, a possible sharp decline in global oil prices and the continued trend of a global weakening of the U.S. dollar will contribute to a slowdown in inflation in the future.

Pro-inflationary factors include a possible re-escalation of U.S. tariff policies, which would amplify the risk of additional price increase for certain types of commodities in international markets. The risk of re-escalation of geopolitical tensions remains noteworthy as it has a significant impact on international commodity prices. This scenario also envisages that inflation remains above the target for a prolonged period and aggregate demand remains above its potential level. "The materialization of these risks would necessitate a tightening of the policy rate," the NBG said.

The Monetary Policy Committee will hold its next meeting on December 17.

Georgia's biggest investment bank, Galt&Taggart, expects the refi rate to remain at 8% until the end of this year, with a gradual decline expected to begin in the second half of 2026.

The NBG lowered the rate three times in the first half of last year, by 0.25 pp on May 22, 0.75 pp in the middle of March and 0.5 pp in January, as inflation slowed. The rate has been 8% since June 19 last year.