The Central Bank of Georgia has lately been known for its faster reaction than others, and it will continue so,” said Natia Turnava, President of the National Bank of Georgia (NBG).

According to Natia Turnava, the NBG is prepared for all scenarios.

“We observed low inflation at an average of 1.1 per cent in 2023-2024. As you know, the target inflation is 3 per cent. According to our forecasts, we expected that inflation would exceed the target rate in 2025 at least because, compared to previous years, the base was low and growth would appear. Some one-time factors would influence, but we expected that after the fall of 2025, inflation would go downward and would gradually reach the target rate. Events were developing as we predicted.

However, the new challenge related to the conflict in the Middle East, Strait of Hormuz closure and the situation on the oil market are noteworthy. There is much ambiguity, and everything depends on how long this conflict and the impediments to oil supply will continue.

However, if we assume that the March figures only partially reflect this shock, 4.3 per cent is lower inflation than in the previous period. It is also noteworthy that core inflation, which excludes products whose prices are characterized by high volatility, is 2.4 per cent, below the target, which means that we are still managing to keep inflation expectations well managed. This assists us in resisting new challenges.

The impact which the new geopolitical challenge will have on prices depends on the duration of the shock.  However, the NBG is prepared for all scenarios. We have made internal calculations, from which our policy decisions are then derived in correlation with different oil prices,” she said.

The NBG President further explained that, like other central banks of other countries, the NBG remains in the expectation regime and closely follows the developments.

“Based on this, we are ready to tighten policy. In general, the Central Bank of Georgia has been known to react faster than others during recent shocks, and this will continue to be the case,” she concluded.