Key policy rate in Serbia remains unchanged

At its meeting today on Friday, the NBS Executive Board voted to keep the key policy rate on hold, at 5.75%. It did not change the deposit (4.5%) and lending facility (7.0%) rates either.

As said, when making the decision, the Board noted that, though inflation retreated significantly and is moving within target bounds, a cautious momentary policy should still be pursued. Inflation at home greatly depends on developments in global commodity and financial markets which are currently highly volatile amid uncertainty related to trade policies of leading global economies.

Consistent with the NBS’s expectations, inflation moved around the upper bound of the target tolerance band in Q1 2025, measuring 4.4% in March, whereas core inflation declined to 5.1% in March, its lowest level since July 2024. The Executive Board expects inflation to continue to move within the target tolerance band, slow from mid-year and approach the 3% midpoint by the end of the year. This will be supported by the still restrictive effects of monetary policy, the onset of the new agricultural season – assuming it will be average – as well as the expected low prices of petroleum products in accordance with futures.

As the NBS says, as regards real sector developments, according to the SORS flash estimate, GDP grew by 2.0% in real terms in Q1 2025. Lower-than-expected growth, as assessed by the Executive Board, is recorded in both the production and services sectors and is a consequence of still weak external demand, issues in the European automobile industry, and elevated risk aversion globally, as well as blockades. Still, the Executive Board expects an acceleration of economic activity later in the year, supported primarily by supply-side factors, notably the planned step-up of production in the automobile industry, the activation of new capacities in the energy sector, and the implementation of infrastructure projects under the “Expo 2027” program.

The next rate-setting meeting where economic developments will be considered is scheduled for June 12, whereas, on May 14, the latest macroeconomic projections will be presented as part of the May Inflation Report.

Narodna banka Srbije Beograd

National Bank of Serbia

key policy rate

deposit facility rate

lending facility rate