On June 17, 2026, the Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) decided to keep the monetary policy rate (refinancing rate) unchanged. The monetary policy rate stands at 8.25 per cent.

“In May, annual inflation stood at 5.7 per cent. The increase in inflation relative to the 3 per cent target was mainly driven by a significant increase in energy resources prices. These inflationary pressures mainly reflect external factors, including elevated volatility in international energy prices and supply-side disruptions. At the same time, measures of relatively sticky prices, which better reflect long-term inflation expectations, have shown a slight acceleration in the recent period. In particular, core inflation (excluding food, energy and tobacco) stood at 3.5 per cent in May, while services inflation was 3.8 per cent. Although these indicators remain significantly below headline inflation, their recent dynamics continue to point to risks of strengthening second-round effects.

Conversely, international commodity markets have recently seen a notable correction in energy prices. Driven by rising optimism over a potential peace agreement between the US and Iran, global oil prices have fallen substantially from their peak. This aligns with the NBG’s central scenario, which assumed that the acute inflationary pressure caused by the external shock would peak in the second quarter of this year before gradually easing. Consequently, under this baseline projection, inflation will maintain its downward trajectory from the second quarter of 2026, averaging 4.9 per cent over the year, before gradually returning to target in the medium term,” reads the report by the Monetary Policy Committee.

Furthermore, the National Bank has noted that economic activity remains strong. The economy grew by 6.2 per cent in April 2026, while average growth in the first four months of the year reached 8.3 per cent. Notably, high-productivity sectors remain a key driver of economic growth, partially offsetting demand-side inflationary pressures.

“Global uncertainty remains elevated. The main sources of this uncertainty remain the further evolution of the ongoing conflict in the Middle East, developments in international energy prices, and the timeline for the restoration of damaged infrastructure. Therefore, the MPC, in addition to the central scenario, considered both high and low-inflation risk scenarios.

In the event of the realisation of the high-inflation risk scenario, fundamental processes require a higher trajectory of the monetary policy rate than the central scenario. The high-inflation scenario assumes a further, prolonged escalation of geopolitical tensions, resulting in additional infrastructure damage and a delayed recovery process. Against this backdrop, global commodity prices would rise further, leading to widespread supply chain disruptions. As a result, the supply-side inflationary shock would amplify in Georgia, strengthening second-round effects, and ultimately inflation would be higher than in the central scenario.

On the other hand, the low-inflation risk scenario outlined by the MPC would, if realised, permit a more rapid easing of the monetary policy rate than projected in the baseline scenario. The low-inflation risk scenario assumes that a peace agreement in the Middle East would lead to an immediate stabilisation of prices at international commodity markets. In such a case, pressures on energy prices would ease rapidly, which would be reflected in lower domestic inflation. At the same time, Georgia’s external position remains robust. Notwithstanding the significant external shock, resilient FX inflows and a low sovereign risk premium continue to anchor the stability of the real effective exchange rate. Moreover, the continued relative weakness of the U.S. dollar in global markets serves as an additional supportive factor. If these conditions persist, imported goods inflation is likely to be lower than expected, and, as a result, headline inflation will converge to the target more rapidly than in the central scenario,” the National Bank of Georgia stated.

In light of its ongoing macroeconomic assessment and current risk factors, the MPC has decided to leave the policy rate unchanged at 8.25 per cent. The NBG continues to closely monitor ongoing developments and the intensity of their transmission to the domestic market. If inflationary shocks stemming from geopolitical tensions become even more prolonged and/or their magnitude would amplify the risks of second-round effects, the MPC will continue to moderately increase the monetary policy rate. Thereafter, once the inflationary shock dissipates, the NBG will begin a gradual normalisation of the policy stance.

The next meeting of the Monetary Policy Committee will be held on July 29, 2026.