JELAŠIĆ: Conditions for reduction of referential interest rate exist

(Radovan Jelašić)

The Governor of the National Bank of Serbia (NBS), Radovan Jelašić, said on January 22nd, that, taking in concern current macroeconomic indices, there were conditions for NBS to keep lowering the referential interest rate.

- Taking into account what happens with the prices and macroeconomic stability at the moment, we are much closer to keep lowering the referential interest rate - he said to the press in NLB Bank in Serbia. Jelašić reminded that NBS had lowered the referential interest rate from 17.75 to 9.5% over the previous year. The referential interest rate was lowered by 0.5%, to its current level of 9.5%, on December 29, 2009.

Before that, it was lowered by 1% on November 5th (to 10%), October 8th (to 11%) and on July 10th (to 12%). Jelašić estimated that the entrepreneurs who demanded stable exchange rate of Dinar from NBS were "knocking on already opened door".

- Changes in the exchange rate over the last few days speak more than words - said Radovan Jelašić, the Governor of the central bank.

The Administrative Board of the Chamber of Commerce of Serbia (PKS) announced on January 21st that the entrepreneurs were suggesting that NBS should lower the threshold for interventions in foreign currency market, that is, that it should affect the demand and supply of foreign currencies even if the daily fluctuations in foreign currency exchange rate were smaller. One of the measures suggested by the Administrative Board of PKS is that the central bank provides higher liquidity of banks by reducing the mandatory reserves for foreign currency principal and citizens' savings, as well as that it gradually reduces the amount of mandatory foreign currency reserves in RSD until it revokes it completely. NBS, as it was suggested, should keep lowering the referential interest rate because both public consumption and inflationary pressures are reduced.