NBS: Key policy rate remains at 5.75%

At its most recent meeting, the NBS Executive Board voted to keep the key policy rate unchanged at 5.75%, as well as the deposit (4.5%) and lending facility (7.0%) rates, the National Bank of Serbia (NBS) announced.

The Board made the decision primarily in view of the actual and expected inflation, as well as factors from the domestic and international environment affecting its movements. Y-o-y headline inflation in Serbia slowed significantly in September – to 2.9% and then to 2.8% in October, mostly as a result of the Serbian Government’s Decree on Special Conditions for Trade in Certain Types of Goods. As of September, the Decree capped trade margins on food items and certain household cleaning products at 20% for a period of six months, the NBS points out in the press release.

The Board expects inflation to continue trending around the target midpoint as long as the Decree is in force, and to remain within the target tolerance band of 3±1.5% in the medium term.

– This should be facilitated by the announced adoption of systemic laws that will curb unfair merchant practices, as well as by the easing of cost-push pressures from the international environment, the effects of the dollar’s weakening against the euro, and the arrival of the new agricultural season, assuming that it turns out better than this year’s. The increase in disposable income and the low base from September this year will act in the opposite direction – the press release notes.

At the most recent meeting, the Executive Board adopted the November Inflation Report with the latest macroeconomic projections that will be presented to the public in more detail at the press conference on November 19, along with additional explanations of monetary policy decisions.

The next rate-setting meeting where economic developments will be considered is scheduled for December 11.

Narodna banka Srbije Beograd

National Bank of Serbia

NBS

key policy rate