National Bank of Georgia Raised Refinancing Rate Due to Rising Inflation in the Eastern Bloc

The National Bank of Georgia (NBG) raised the refinancing rate from 8% to 8.25% over the past two years. The bank explains this decision by the increase in inflation risks due to the war in the Middle East, which has caused a surge in global prices for oil, energy, and food. For most citizens, this means higher credit costs starting tomorrow.

The decision was made on May 6 during the NBG monetary policy committee meeting. The regulator noted that the escalation of the war in the Middle East and the resulting economic shocks have already increased inflation risks and raised business costs. The inflation rate has already exceeded the target and is above the Georgian national currency.

In April, inflation in Georgia accelerated to 5.9%, while the National Bank's target was 3%. This basic inflation figure does not include prices for products, energy, and tobacco, which make up 3.2%.