Georgia Holds Key Rate Steady

The National Bank of Georgia kept its policy rate unchanged at 8% during its September 2025 meeting, maintaining a cautious stance amid inflation risks. Annual inflation rose 4.6% in August, above the 3% target, driven mainly by volatile food prices, while core inflation stayed below target at 2.8%. Service inflation reached 4.2%, but imported goods remained deflationary due to lower fuel costs. The bank projects inflation to average 3.8% in 2025 before easing to target in the medium term. Economic growth slowed toward trend, with GDP up 6.5% in July, while tighter financial conditions eased demand pressures. Policymakers noted risks from volatile US tariff policy, supply chain disruptions, and Middle East instability, which could lift inflation. Conversely, weaker global food prices and a stronger exchange rate may lower it. Balancing these scenarios, the MPC kept rates steady, signaling future moves will depend on updated forecasts and risk assessments.