Georgia's Central Bank Holds Refinancing Rate at 8% Amid Global Economic Uncertainties

The National Bank of Georgia (NBG) has decided to keep its key refinancing rate at 8% for the third consecutive time, prioritizing stability in the face of ongoing global and geopolitical risks. The decision, announced after the Monetary Policy Committee's latest meeting, signals a continued cautious approach to the nation's economic management.

For a long period, the NBG maintained a tight monetary policy. This approach began to ease in May 2023, when the refinancing rate was first reduced after 13 months, dropping to 10.5%. This was followed by a series of gradual cuts: to 10.25% in August, 10% in September, 9.5% in December, 9% in January 2024, and 8.25% in March, before settling at the current 8% in May. The rate has remained unchanged ever since.

According to a statement from the regulator, the committee found it "optimal to maintain a cautious approach to further rate normalization and left the monetary policy rate unchanged at 8%." This decision was based on a thorough macroeconomic analysis and an assessment of existing risks.

The NBG noted that annual inflation remains within its 3% target, even as it has been moderately rising. As of May 2025, the overall price level increased by 3.5% year-on-year, while core inflation stood at 2.0%. The bank stated that long-term inflation expectations are stable, and the upward pressure from global food prices is being offset by a decrease in imported goods prices, particularly for fuel.

Despite the stable domestic figures, the NBG highlighted that high economic uncertainty persists due to global geopolitical tensions and trade restrictions. The committee considered scenarios for both high- and low-inflation risks.

Specific factors influencing the NBG's caution include:

Rising oil prices driven by military actions in the Middle East.

Increased risks of economic fragmentation and supply chain deterioration at the international level.

The volatile tariff policy of the United States, which could potentially destabilize the global economy.

The NBG's central forecast suggests inflation will temporarily exceed its target in 2025, averaging 3.8%, before stabilizing around 3% in the medium term. The regulator concluded that future changes to the monetary policy rate will depend on updated macroeconomic forecasts and a continuous analysis of these risks.

The next meeting of the Monetary Policy Committee is scheduled for July 30, 2025.