National Bank of Georgia Raises Refinancing Rate to 8.25% — First Change in Two Years

The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) raised the refinancing rate by 0.25 percentage points to 8.25% on May 6, 2026 — marking the first change in the key rate since May 2024. The NBG cited escalating geopolitical tensions in the Middle East and sustained disruptions to shipping through the Strait of Hormuz as the primary drivers of the decision.

Why the Rate Changed Now

The NBG described the Middle East escalation as creating a "supply-side driven inflationary shock" to the global economy. Prolonged disruptions to the Strait of Hormuz — a critical global shipping chokepoint — have pushed up oil prices and, by extension, fuel costs within Georgia.

According to the NBG's May 6 statement, the combined direct and indirect effects of these supply shocks pushed Georgia's annual inflation well above the 3.0% target, with "relatively sticky price measures" raising the risk of second-round effects. The central bank did not break out the precise current-month figure in the May 6 statement itself; the next CPI release is the operative data point for confirming the trajectory.

Despite these headwinds, the NBG emphasised that Georgia's economy "remains resilient and economic growth stays high." Real GDP grew by 10.7% year-on-year in Q1 2026, with high-productive sectors cited as a key offset to demand-side inflationary pressures.

What This Means for Borrowers and Businesses

The rate increase has direct implications for the cost of borrowing in Georgia:

Bank lending rates: Georgian banks typically price loans with reference to the NBG refinancing rate. A higher rate translates to increased borrowing costs for both corporate and retail borrowers.
Mortgage financing: Individuals holding or seeking GEL-denominated mortgages should anticipate higher monthly payments as banks adjust their lending terms.
Working capital and investment loans: Businesses relying on credit for expansion or operations may face elevated financing costs in the near term.
Deposits: Savers may see modestly improved deposit rates as banks compete for funding.

Forward Guidance: Further Tightening Possible

The MPC stated it would continue to "closely monitor" geopolitical developments. If inflationary shocks from the Middle East persist or intensify, the NBG stands ready to raise the rate further in a "moderate" tightening cycle. Conversely, once the supply-side shock dissipates, the NBG has indicated it will begin gradual normalization of its policy stance.

Under the NBG's high-inflation scenario, a prolonged or intensified geopolitical crisis could push commodity prices higher, amplifying second-round inflationary effects in Georgia beyond the central scenario baseline. The low-inflation scenario assumes faster de-escalation in the Middle East, leading to a moderation of global supply-side pressures.

The NBG's next scheduled MPC meeting is June 17, 2026.

Context: Two Years of Rate Stability

Prior to this increase, the NBG held the refinancing rate steady at 8.0% since May 2024. The last previous change was a cut in mid-2023, reflecting improving inflation conditions. The current tightening reflects the NBG's willingness to act decisively against external inflationary shocks while attempting to preserve economic growth momentum.

What This Means If You Borrow, Save, or Convert Currency in GEL

Higher financing costs for GEL-denominated loans in the near term — banks will reprice variable-rate facilities as soon as the new refi rate is operational.
Mortgage holders with variable GEL rates should expect higher monthly payments within one to two billing cycles.
Savers may see modestly improved deposit rates as banks compete for funding.
GEL/USD: sustained higher local rates can support the lari against capital outflows, though the trade-weighted picture is shaped more by current-account flows than by the refi rate.
Next MPC meeting on June 17 — watch the press release; it is the next data point on whether further tightening is coming.

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