The National Bank of Georgia held its key policy rate steady at 8.25% at its October 2026 meeting, maintaining a moderately tight stance amid persistent inflationary pressures. Annual inflation rose to 5.6% in September, well above the bank’s 3% target, with energy prices contributing around 2 percentage points. The central bank raised its 2026 inflation forecast to 5.4% from 5.2%, while expecting inflation to average 3.5% in 2027 before gradually converging toward target from the second half of the year. Economic activity remained stronger than expected, with growth averaging 7.6% in the first eight months of 2026, prompting the bank to raise its 2026 GDP growth forecast to 7.2% from 6.5%. The bank warned that further escalation in the Middle East could push energy prices and inflation higher, potentially prompting additional rate hikes, while easing tensions and lower energy prices could allow faster monetary policy normalization.