Georgia’s National Bank raises refinancing rate to 8.25%, making loans more expensive
Loans in Georgia to become more expensive
At its meeting on 6 May 2026, the Monetary Policy Committee of Georgia’s National Bank raised the refinancing rate by 0.25 percentage points to 8.25%. The decision is expected to make loans more expensive for nearly 250,000 borrowers. The rate had remained unchanged at 8% since May 2024.
According to the National Bank, escalating tensions in the Middle East and disruptions to shipping routes through the Strait of Hormuz have triggered fresh global supply disruptions, driving up energy prices on international markets. The bank said the developments had increased both production and transport costs, adding to inflationary pressures.
The central bank said rising oil prices had already affected Georgia through higher fuel costs. In April 2026, annual inflation rose to 5.9%, above the bank’s 3% target. Core inflation, which excludes food, energy and tobacco prices, stood at 3.2%, while services inflation reached 3.7%.
The National Bank said stronger growth in “sticky” prices pointed to rising long-term inflationary pressures and higher inflation expectations. According to the bank, this increases the risk of second-round effects, although overall indicators remain close to the target level.
In terms of economic activity, the National Bank said Georgia’s economy had remained resilient despite geopolitical shocks. According to preliminary data, economic growth reached 10.7% in March 2026, while first-quarter growth stood at 9.1%. The bank said the expansion had been driven mainly by high-productivity sectors, which had partly offset inflationary pressure from demand.
The Monetary Policy Committee said the rate increase was aimed at keeping inflation expectations aligned with the target level. Under the bank’s baseline scenario, the current conflict in the Middle East is expected to end in the second quarter, although the bank noted that the outlook remained highly uncertain. It also warned that restoring global supply chains could take considerable time.
The committee reviewed both high-inflation and low-inflation scenarios. Under the high-inflation scenario, a prolonged conflict, further increases in international prices and more severe supply chain disruptions would push inflation above the central forecast and require tighter monetary policy.
According to the National Bank, under the low-inflation scenario, a rapid easing of geopolitical tensions would reduce price pressure on international markets, lower transport costs and ease global inflationary pressures, paving the way for a gradual normalisation of monetary policy.
The committee said raising the policy rate to 8.25% represented a moderate tightening under current conditions and was aimed at gradually returning inflation to the 3% target once supply-side shocks faded. The National Bank said it would continue monitoring economic and inflation trends and did not rule out further monetary policy adjustments if necessary.
The committee’s next monetary policy meeting is scheduled for 17 June 2026.
Comments by the National Bank president
According to acting National Bank president Natia Turnava, the increase in the policy rate was a preliminary and preventive step aimed at addressing inflation risks coming from global markets.
She said inflationary pressure was currently being driven mainly by fluctuations in international energy prices, particularly oil and petroleum products. Turnava said the trend had already been reflected in April’s inflation data and that external factors had played a major role in rising prices.
She added that an import-dependent economy such as Georgia’s was particularly vulnerable to global energy shocks and uncertainty in the Middle East, which was causing additional volatility in oil markets.
According to Turnava, the modest rate increase was intended to neutralise those risks in advance. She said the central bank’s goal was to stabilise inflation expectations and ensure long-term price stability.
“Against this backdrop, we decided to raise the refinancing rate, even by a small margin. The move is clearly preventive in nature. Its purpose is to prevent inflationary pressures and risks from feeding into the domestic economy, maintain price stability and gradually bring inflation back to the 3% target,” Turnava said.
She added that despite the uncertainty, the National Bank was seeking to manage inflationary pressures in a way that would help keep inflation stable over the medium term.
Loans in Georgia to become more expensive
