TBC Capital expects Georgia’s monetary policy rate to decline to 7.5% by the end of 2026, according to its latest macroeconomic review.
The report notes that annual inflation in January rose to 4.8%, up from December’s 4%, slightly exceeding TBC Capital’s 4.5% baseline scenario. Seasonally adjusted monthly inflation also accelerated, driven mainly by food prices, though price growth was observed across a broader range of goods.
Despite this, TBC Capital suggests that only a minor upward adjustment of the inflation forecast may be needed, as imported inflation remains weak, wage pressures are limited, and services inflation, which reflects long-term trends, remains moderate. The forecast anticipates annual inflation approaching 4% in March, with a gradual slowdown thereafter. Potential price changes in electricity tariffs and food from spring could further impact inflation, though these are not yet incorporated into the forecast.
High inflation usually calls for tighter monetary policy, but the central bank focuses on inflation forecasts rather than current levels. Since the baseline scenario points to slowing inflation, conditions are favorable for a reduction in the refinancing rate. The Monetary Policy Committee’s next meeting is scheduled for January 11, and TBC Capital expects the policy rate to reach 7.5% by year-end.
