Economist at investment bank Galt & Taggart, Lasha Kavtaradze, says that discussions on easing monetary policy in Georgia could only become realistic in 2027, given the current inflation outlook and interest rate environment.
Speaking to BMG, Kavtaradze noted that the bank expects average annual inflation in Georgia to remain around 4.8% in 2026. This forecast is based on the assumption that oil prices will begin to normalize in the second half of the year, easing external inflationary pressure.
“Our forecast is based on the assumption that oil price normalization will start in the second half of the year, possibly even earlier, based on current trends. If this continues, average annual inflation is expected to be around 4.8% this year. In 2027, under the baseline scenario, inflation is expected to fall below the target level, as one-off and supply-side shocks are neutralized and price pressures ease significantly,” Kavtaradze said.
He added that only in 2027 could the country realistically consider easing monetary policy, and even then, the reduction in the refinancing rate would likely be limited. “We believe that monetary policy easing may be discussed in 2027, and it could be around 0.75 percentage points,” he said.
Kavtaradze also said he did not expect the National Bank to raise the refinancing rate further in 2026, and that the recent hike was likely sufficient under current conditions.
For context, the National Bank of Georgia recently increased the refinancing rate by 0.25 percentage points to 8.25%, citing inflationary pressures driven largely by geopolitical tensions in the Middle East and rising global energy prices. Inflation in April reached 5.9%, the highest level in two years.
