Serbia Monetary Policy May 2018


Serbia: Central Bank stands pat in May

May 16, 2018

At its monthly monetary policy meeting held on 16 May, the Executive Board of the National Bank of Serbia (NBS) decided to keep its key policy rate unchanged at 3.00%. The decision, which came after two 25 basis points rate cuts in March and April, was widely expected by markets and came against a backdrop of declining inflation despite strong economic growth at home.

Inflation slowed to 1.1% in April from 1.4% in March, dropping further below the lower bound of the NBS’s target range of 3.0% plus or minus 1.5 percentage points. Moreover, core inflation remained steady in April at the record-low of 0.8% recorded in March. A strong dinar has kept price pressures at bay despite strong year-on-year economic growth in the first quarter 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 said that the executive board will keep a close look at latest development in international financial and commodity markets. However, further monetary easing can be expected if inflation fails to pick up or the currency continues to strengthen in the upcoming months.

The next monetary policy meeting is scheduled for 13 June.

FocusEconomics Consensus Forecast panelists are currently reassessing their forecasts for this year and next. New Consensus Forecasts will be available from 9 May.

Author: Jean-Philippe Pourcelot, Economist

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Serbia Monetary Policy Chart

Serbia Monetary Policy May 2018

Note: NBS Reference Rate in %.
Source: National Bank of Serbia (NBS).

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