TBC Capital expects the National Bank of Georgia (NBG) could raise its refinancing rate by 0.25 percentage points at its December monetary policy meeting to tackle inflation, which currently stands at 5.9%, almost twice the 3% target. However, TBC Group Chief Economist Nikoloz Zurabishvili says further appreciation of the Georgian lari may be a more effective tool against imported inflation.
Zurabishvili noted that tighter monetary policy cannot reduce global oil prices, which are among the key external drivers of inflation. A stronger lari could help offset rising international prices, potentially requiring the central bank to slow the accumulation of its foreign exchange reserves.
He added that additional lari appreciation could become necessary if imported inflation accelerates beyond current expectations, although this is not TBC Capital’s baseline scenario.
According to Zurabishvili, if international conditions do not worsen and food and fuel prices stabilize, inflation should move closer to the NBG’s 3% target in the second half of 2027, making further significant monetary tightening unnecessary.
