NBS: Key policy rate remains unchanged

At its meeting today, 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, the National Bank of Serbia (NBS) announced.

– The prices of some food inputs in the global exchanges (cocoa and coffee) that recently reached their maximum levels, as well as the effects of the last year’s drought and reduced supply of fruit and vegetables, triggered accelerated y-o-y growth in domestic food prices over the past months. Due to high air temperatures, there is a risk that this year’s season could be below average as well, and the data released by the SORS indicate that this year’s yields of some early fruit cultures are lower than last year. When making the decision, the Board noted that central banks worldwide, including the NBS, continue to face marked uncertainty regarding protectionist measures of leading world economies and their impact on inflation and economic growth – the NBS says in its press release.

As emphasized, the conflict in the Middle East has flared up further, introducing a new risk dimension with regard to global prices of oil and natural gas, though these prices subsided once the truce was announced. In such uncertain global circumstances, the NBS adds, there is high volatility in global commodity and financial markets, mandating caution in the conduct of monetary policy.

– The Board also took into account the ECB’s continued accommodative stance in June, which should reflect on more favorable euro-indexed lending in Serbia, while the current announcements suggest that the Fed will be more cautious in monetary policy easing going forward – the press release clarifies.

Narodna banka Srbije Beograd

National Bank of Serbia

key policy rate