NBG Keeps Key Refinancing Rate Unchanged at 8%
On December 17, the Monetary Policy Committee of the National Bank of Georgia (NBG) decided to keep its key refinancing rate unchanged at 8%, maintaining what it called “a moderately tight monetary policy.” The central bank has not adjusted the rate since May 2024.
The NBG said annual inflation stood at 4.8% in November, driven mainly by food prices, which it attributed to a low base effect from last year and external factors. Core inflation, excluding food, energy and tobacco, was 2.3% in November, the bank said, below its 3% target.
Under its central scenario, the NBG projects inflation to average 4% in 2025 and 3.5% in 2026, noting that food price pressures are expected to be temporary. The bank said “overall demand is gradually converging toward its long-term potential,” which should ease demand-side inflationary pressures.
“Given the high uncertainty, upside risks to inflation are more pronounced, while downside risks continue to remain,” the NBG said, adding that the committee considered both high- and low-inflation scenarios alongside the central forecast.
The Monetary Policy Committee outlined two alternative risk scenarios that could affect future policy decisions.
In the high-inflation scenario, the NBG said flexible prices, particularly food prices, could remain elevated for a prolonged period, pushing inflation expectations higher. It also cited potential increases in global commodity prices, especially oil, amid worsening geopolitical tensions, as well as stronger-than-expected economic fragmentation that could disrupt supply chains and fuel global inflation, which would require tighter monetary policy.
By contrast, the low-inflation scenario assumes that domestic labor market conditions, a prolonged period of a weak U.S. dollar and declining international food prices would put downward pressure on headline inflation.
The NBG said future rate decisions will depend on updated data and the realization of risks. Under the central scenario, it expects to continue normalizing monetary policy only after temporary factors fade and inflation converges to target, “However, should inflation persist above the target for an extended period due to various one-off factors, the MPC stands ready to maintain the current tight stance for longer than expected and, if necessary, to tighten it further,” the NBG said.
The next Monetary Policy Committee meeting will be held on February 11, 2026.
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