Monetary Board increased referential interest rate by 3%

Monetary Board of NBS has increased the referential interest rate by 3%, from current 11.5 to 14.5%. Monetary Board of the National Bank of Serbia (NBS) explained that the immediate increase in the level of restriction of monetary policy was inevitable, in order for basic inflation to remain within the projected frame of 3 to 6%.

According to the estimates of that board, the influence of non-economic and external factors in the conditions of the worsened macroeconomic state have abruptly become stronger, and the growth of risk premium and reservation and withdrawal of investors, mainly foreign ones, is noticeable.

In addition to significantly increased inflatory expectations, the scope of turnover on the foreign currency market has been reduced, which creates an additional pressure on the national currency.

Monetary Board has also warned about increase in the inflatory pressures because of the increase in price of crude oil, as well as the danger from increased fiscal expenses, which are common before the elections.

The next meeting of the Monetary Board will take place on March 28, 2008.

Narodna banka Srbije Beograd

Monetary Board of National Bank of Serbia