On December 18, 2024, the Monetary Policy Committee of the National Bank of Georgia (NBG) decided to maintain the monetary policy rate (refinancing rate) at 8.0 percent.

Inflation remains below the 3% target. In November 2024, the overall price level increased by 1.3 percent year-over-year, while core inflation was recorded at 1.6 percent. The continued low inflation environment has largely been sustained through consistent monetary policy, which has contributed to stable long-term inflation expectations. Notably, the prices of domestically produced goods and services, which are relatively resistant to short-term fluctuations and reflect long-term inflation expectations, increased at a moderate pace, with an annual change of 1.8 percent in November. At the same time, economic activity has been robust, with preliminary data indicating an average economic growth of 10 percent for the first ten months of the year. However, the NBG assesses that the economy's potential has also risen, which partially mitigates inflationary pressures from strong demand. The current forecast suggests that inflation will remain below the target in 2024, averaging 1.2 percent, and is expected to stabilize around 3 percent in the medium term.

Despite these trends, the economic outlook remains highly uncertain. Significant domestic factors, as well as geopolitical tensions in the region, could increase the country's sovereign risk premium, leading to potential inflationary pressures. Furthermore, volatility in global oil and food prices has increased, with international food commodity prices rising substantially in recent months, posing inflationary risks. Additionally, global shipping costs have slightly increased, and if these trends persist, higher international prices could translate into local market price increases, which may worsen inflation expectations.

In light of the current domestic and external economic conditions, the National Bank of Georgia has opted to keep the monetary policy rate unchanged at 8.0 percent. A cautious approach to monetary policy normalization is deemed essential to ensure that inflation remains near its target over the medium term. Should inflationary risks not materialize and the severity of these risks subside, the NBG will consider gradually reducing the policy rate to its neutral level, which is currently estimated at 7 percent. However, if factors that contribute to rising inflation expectations re-emerge, the NBG may need to tighten monetary policy or maintain the current tight stance for a longer period.

The National Bank of Georgia will continue to monitor ongoing economic developments and financial market conditions, utilizing all available tools to maintain price stability.

The next meeting of the Monetary Policy Committee is scheduled for January 29, 2025.