Georgia signals cautious optimism, keeps policy rate unchanged

The National Bank of Georgia announced that the country’s refinancing rate will remain unchanged at 8% since May 2024, following the latest meeting of the Monetary Policy Committee.

As Caliber.Az reports, citing Georgian media, in a statement, the regulator said: “Based on macroeconomic analysis and consideration of the scenarios mentioned above, the Monetary Policy Committee deemed it optimal to maintain a moderately tight monetary policy and left the policy rate unchanged at 8 percent.”

The National Bank highlighted that the rate reduction began in May 2023, after 13 months of a restrictive monetary policy when the refinancing rate stood at 10.5%. The rate was gradually lowered over the following months, reaching the current level in spring 2024.

Looking ahead, under the central scenario, the bank projects that inflation will remain temporarily above the target in 2026, at around 4%. “The current inflation dynamics remain temporary and do not trigger second-round effects,” the regulator noted.

Economic activity is also gradually returning to long-term growth trends. The National Bank forecasts real GDP growth of 5% in 2026.

The bank emphasized that future adjustments to the policy rate will depend on incoming data and the realization of risks. “If the impact of one-off factors affecting inflation persists, the Monetary Policy Committee is prepared to maintain the current stance for an extended period and, if necessary, tighten it further,” the statement said.

By Vafa Guliyeva