The National Bank of Georgia left its key policy rate unchanged at 8.25% at its October 2026 meeting, maintaining a moderately tight monetary stance in response to ongoing inflationary pressures. Annual inflation accelerated to 5.6% in September, significantly above the Bank’s 3% target, with higher energy prices accounting for roughly 2 percentage points of the increase.
In light of these developments, the central bank revised its 2026 inflation forecast up to 5.4% from 5.2%. It now expects inflation to average 3.5% in 2027 and then gradually converge toward the 3% target in the second half of that year.
Economic activity has been stronger than anticipated, with real GDP growth averaging 7.6% in the first eight months of 2026. Reflecting this resilience, the Bank raised its 2026 GDP growth forecast to 7.2% from 6.5%.
The Bank cautioned that a further escalation of tensions in the Middle East could drive energy prices and inflation even higher, potentially necessitating additional interest rate increases. Conversely, an easing of geopolitical risks and a decline in energy prices could create room for a faster normalization of monetary policy.
