On June 18, 2025, the Monetary Policy Committee of the National Bank of Georgia (NBG) decided to leave the monetary policy rate (refinancing rate) unchanged at 8%.

Inflation remains close to the NBG’s target of 3%. In May, annual inflation stood at 3.5%, while core inflation—which excludes volatile components such as food, energy, and tobacco—declined slightly to 2.0%. Long-term inflation expectations remain well-anchored, with service sector inflation, often a reflection of these expectations, at 2.2%.

Price increases are largely driven by food, reflecting global market trends. However, this upward pressure is partly offset by deflation in imported goods, especially due to a year-over-year drop in fuel prices.

According to the NBG’s baseline forecast, inflation will temporarily exceed the target in 2025, averaging 3.8%, due to base effects and global dynamics. Over the medium term, inflation is expected to stabilize around the 3% target.

Economic activity remains strong. Preliminary data shows that average real GDP growth reached 8.8% in the first four months of 2025, although it is gradually converging toward long-term trends. Credit activity has also aligned more closely with its sustainable level.

The global outlook remains uncertain, marked by geopolitical tensions, military conflict in the Middle East, and rising risks of global economic fragmentation—all of which could pressure inflation upward. If such risks materialize, they may warrant a tighter monetary policy stance.

Conversely, a low-inflation scenario is also plausible. The weakened U.S. dollar and a moderate decline in international food prices could support a stronger exchange rate and lower imported inflation. If these trends persist, they may justify a lower interest rate path.

Considering both high and low inflation scenarios, the NBG opted for a cautious approach and decided to maintain the current policy rate. Future decisions will be based on updated macroeconomic forecasts and risk assessments.

The NBG reaffirmed its commitment to price stability, aiming to keep inflation close to the 3% target over the medium term.

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