Financial analyst Archil Iakobashvili says the National Bank of Georgia had little choice but to tighten monetary policy, calling the recent decision to raise the refinancing rate “expected.”
The National Bank’s Monetary Policy Committee increased the key rate by 0.25 percentage points to 8.25%, citing inflationary pressures driven by geopolitical tensions in the Middle East and rising import costs. Inflation in April reached 5.9%, the highest level in two years.
“National Bank had no other option. This decision was expected. Earlier, when the neutral rate was around 7%, monetary policy was already moderately tight at 8%. But after inflation in March and April, the neutral rate effectively moved closer to 8%, so a hike became necessary,” Iakobashvili said on TV-program “Analytics.”
He added that the need for tightening emerged in response to import-driven inflation pressures observed in recent months.
Iakobashvili also argued that earlier policy decisions could have helped ease current inflationary pressures. “A stronger appreciation of the lari in 2025 was possible given the level of reserve accumulation, but unfortunately, the National Bank did not take that step,” he said.
