Serbia Monetary Policy September 2020


Serbia: National Bank of Serbia leaves rate unchanged in September

September 10, 2020

At its meeting on 10 September, the Executive Board of the National Bank of Serbia (NBS) held the key policy rate unchanged at the historic low of 1.25%.

The decision to stand pat largely reflected the Bank’s assessment that the impact of the monetary policy measures taken previously to cushion the fallout from the coronavirus health crisis should maintain favorable financing conditions and boost economic growth. Moreover, it deemed that the government’s fiscal relief measures were further supporting the economic recovery. With regard to inflation, relatively low and stable price pressures, coupled with well anchored inflation expectations, further cemented the decision to leave the key policy rate unaltered. While inflation rose to a six-month high of 2.0% in July, it is expected to remain relatively muted in the months ahead due to the fallout from the pandemic. In the medium term, the Bank sees inflation gradually returning to the midpoint of the 1.5%–4.5% target range as the economy recovers.

In its communiqué, the Bank did not provide any specific forward guidance. However, it did hint at additional room for further measures if necessary. Although the NBS pointed to a faster-than-expected economic recovery, there is still a high degree of uncertainty surrounding the outlook, with risks stemming from a potential second wave of the virus. Meanwhile, the majority of our panelists see the Bank standing pat for the remainder of the year.

The next meeting is scheduled for 8 October.

FocusEconomics panelists project the key policy rate to end 2020 at 1.08% and 2021 at 1.25%.

Author:, Economist

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