Serbia’s central bank (NBS) said on Thursday it has decided to keep its key interest rate unchanged at 5.75%, after trimming it by 25 basis points in September.
The NBS also left unchanged its deposit facility rate and lending facility rate, at 4.5% and 7%, respectively, it said in a statement.
The central bank’s board noted that the key interest rate was cut by a total of 75 basis points since June, adding that the effects of that monetary policy easing cycle will be further manifested in the coming period. In addition, the board pointed out that despite the fact that inflation returned within the targeted range of 1.5% to 4.5%, it is necessary to continue implementing the cautious monetary policy due to the unpredictability of macroeconomic events in the international environment and the growth of geopolitical risks which may affect inflation rates on a global level.
In August, Serbia’s consumer prices increased by an annual 4.3%, following a rise at the same pace in July, the statistics office has said.
The board expects the recent upgrade of Serbia’s credit rating to investment grade by Standard & Poor’s will contribute to a lower risk premium for the country and more favorable financing conditions, which will support further growth in available income for investments and consumption, and consequently the country’s economic growth, as per the statement.
The NBS said it expects inflation to slow down to around 4% at year-end and to gradually come close to the target midpoint during the next year, facilitated by the still tight monetary conditions, lower imported inflation and inflation expectations.
“In making monetary policy decisions, the Executive Board took into account that the indicators of the real sector continued to record positive trends during the third quarter, supported by declining inflation, real wage growth and falling unemployment, as well as the current investment cycle,” the NBS said.
Source: SeeNews, Momentum
