The National Bank of Georgia kept its key policy rate unchanged at 8.25% at its July 2026 meeting, maintaining a cautious policy stance amid heightened tensions in the Middle East. Headline inflation inched up to 5.8% in June from 5.7% in May, mainly reflecting higher energy prices associated with the regional conflict. Policymakers stated that the increase was broadly in line with their second-quarter projections, but stressed that potential second-round inflationary effects remain a key risk.
Economic activity strengthened, with year-on-year growth accelerating to 9.0% in the first quarter from 6.7% in the previous quarter, driven by robust performance in the services sector. The overall impact of the conflict on the domestic economy has so far been limited. The central bank continues to project economic growth of 6.5% in 2026 and has revised its forecast for average inflation up to 5.2% from 4.9%. Inflation is expected to start easing in the second half of the year and gradually converge toward the target over the medium term. The path of future policy decisions will depend on the balance of inflation risks and the materialization of second-round effects.
