**National Bank of Georgia Keeps Interest Rate Unchanged**
The National Bank of Georgia (NBG) has decided to keep the key refinancing rate unchanged at 8% as of June 18. This decision was made by the Monetary Policy Committee, which monitors and regulates the country’s monetary policy.
In its statement, the NBG noted that inflation in May stood at 3.5%, close to the target of 3%. The core inflation, which excludes food, energy, and tobacco prices, declined to 2%. The bank emphasized that long-term inflation expectations remain stable, but warned that upward inflation pressure is primarily driven by food prices.
**Food Prices a Concern**
The NBG highlighted that food price increases are partly due to developments in global food markets. However, the bank noted that this trend is counterbalanced by deflation in imported goods, mainly due to lower fuel prices. As a result, the National Bank projects inflation to be “temporarily” above target, averaging 3.8% in 2025.
**Economic Growth Remains Strong**
The NBG also reported that Georgia’s average economic growth for the first quarter of 2025 stood at 8.8%. The bank emphasized that this strong economic activity is accompanied by stable inflation. However, it warned that global economic uncertainty remains elevated due to geopolitical tensions and ongoing trade barriers.
**Risk Factors Abound**
The NBG highlighted several risk factors that could impact the country’s economy and inflation rate. These include a surge in oil prices due to military actions in the Middle East, which could lead to higher fuel costs. Additionally, the bank cited concerns over the deterioration of supply chains and the emergence of a globally inflationary environment.
**Monetary Policy Rate May Be Increased**
In response to these risks, the NBG stated that it would consider increasing the monetary policy rate if inflation rises significantly. However, in a lower inflation risk scenario, the bank noted a “moderate decline” in international food commodity prices and a weakened U.S. dollar index.
**Next Meeting Scheduled for July 30**
The next meeting of the Monetary Policy Committee is scheduled for July 30, 2025. At that time, the NBG will reassess macroeconomic forecast scenarios and risk assessments to inform future decisions on the monetary policy rate.
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