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Serbia Monetary Policy June 2018

Serbia: Central Bank leaves key policy rate on hold in June

At its monthly monetary policy meeting held on 11 June, the Executive Board of the National Bank of Serbia (NBS) decided to leave the key policy rate unchanged at 3.00%. The decision was expected by markets and reflected the Bank’s balanced views of the economy.

The decision came against a backdrop of strong economic growth at home and muted inflation. GDP growth in Q1 came in at 4.6% year-on-year, the fastest expansion in almost 10 years. The sharp acceleration was driven by an across-the-board increase in all GDP components, and it underscores the good health of the economy.

Buoyant economic activity and higher oil prices are expected to fan price pressures going forward, and inflation is expected to pick up from April’s muted 1.1% increase. The NBS foresees inflation reaching the lower bound of its target range of 3.0% plus or minus 1.5 percentage points by the end of the year.

The National Bank of Serbia did not provide clear monetary policy forward guidance but struck a cautionary tone in its latest monetary meeting statement. The NBS Executive Board will keep a close look at developments in international financial and commodity markets and assess their impact on domestic price levels.

The next monetary policy meeting is scheduled for 12 July.

Serbia Interest Rate Forecast

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