Economist Irakli Makalatia described the National Bank of Georgia’s decision to keep the refinancing rate at 8.25% as expected, arguing that the increase in the 2026 inflation forecast from 5.2% to 5.4% was not enough to justify tighter monetary policy. He noted that inflation had remained relatively stable at 5.6% over the previous two months.
Makalatia warned that raising interest rates could curb inflation expectations but would also hurt economic activity and borrowers with loans linked to the refinancing rate. He added that inflation remains above the National Bank’s 3% target, meaning prices continue to rise.
Regarding the revised economic growth forecast of 7.2%, up from 6.5%, Makalatia said high growth rates in developing economies such as Georgia do not necessarily translate into significant improvements in living standards. He attributed much of the growth to the IT sector, questioning how much of the wealth generated stays in the country and benefits local citizens.
The National Bank raised its 2026 inflation forecast to 5.4%, citing persistent global price pressures, and improved its growth forecast due to stronger-than-expected economic activity. On October 21, it kept the refinancing rate unchanged at 8.25%, citing geopolitical tensions in the Middle East, rising energy prices and disruptions to global transportation and supply chains.
