Serbia Monetary Policy February 2019


Serbia: National Bank of Serbia maintains policy in February

February 7, 2019

At its 7 February monetary policy meeting, the Executive Board of the National Bank of Serbia (NBS) voted to keep the key policy rate steady at 3.00%, where it has been since April 2018.

The Bank’s decision to stand pat was primarily guided by sustained price stability. Average inflation came in at 2.0% in 2018, which was well within the Bank’s tolerance band of 1.5%–4.5%. More importantly, the NBS expects inflation to remain within that range and move closer to the midpoint over the medium-term. Despite a strengthening labor market and solid economic growth, inflationary pressures remain modest likely due in part to the Bank’s intervention in the foreign exchange market to keep the dinar stable. On 13 February, the Bank will release its latest Inflation Report which will include its forecasts for inflation and GDP growth.

The NBS continued to provide little forward guidance in its communiqué. Meanwhile, although it stressed that it will carefully monitor external factors—especially the pace of monetary policy normalization in key economies, trade tensions and global oil prices—the Bank also reaffirmed its confidence in the ability of the Serbian economy to withstand external shocks, thanks to improved macroeconomic fundamentals and a stronger fiscal position.

The next monetary policy meeting is scheduled for 7 March.

Serbia Interest Rate Forecast

Nearly all FocusEconomics Consensus Forecast panelists see the Bank holding the key policy rate steady through H1 2019 and then tightening gradually thereafter. Our panelists expect the key policy rate to end 2019 at 3.25% and 2020 at 3.75%.


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Serbia Monetary Policy Chart

Serbia Monetary Policy February 2019

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

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