NBS keeps key policy rate at 4.25%

At its meeting today, the NBS Executive Board decided to keep the key policy rate at 4.25% and maintain a cautious monetary policy stance since it was assessed that the current level of monetary policy expansiveness provides for a moderate rise in inflation from mid-year and its return within the target tolerance band late this or early next year.

Developments in the international environment are characterised by unfavourable prospects for global growth, and hence for the pace of recovery of the euro area, Serbia’s key foreign trade partner, the NBS said in a release.

Uncertainties are also associated with future movements in international prices of oil and other primary commodities, ongoing geopolitical risks and diverging monetary policies of the world’s leading central banks. The slowdown in the global economy coupled with the Fed’s monetary policy normalisation could lead to a rise in investor risk aversion, which could dampen capital flows to emerging economies, including to Serbia.

On the other hand, further monetary policy easing by the ECB in March this year should contribute to the mitigation of external risks, the NBS underlined.

Given the above, the NBS Executive Board decided to keep the key policy rate unchanged at 4.25%.

The next rate-setting meeting will be held on 7 April.