Serbia Monetary Policy


Serbia: NBS cuts its policy rate for second consecutive meeting to a new record low in September

September 10, 2015

At its 10 September monetary policy meeting, the Executive Board of the National Bank of Serbia (NBS) decided to cut the reference rate by 50 basis points to 5.00%, which represents the lowest rate since the NBS introduced an inflation targeting mandate in 2006. The Bank has cut its main monetary policy rate for the second consecutive month at this meeting and by 300 basis points since March.

In its accompanying statement, the NBS stated that while inflation remains low, inflation expectations remain within the Central Bank’s lower band of 4.0% plus/minus 1.5%. Disinflationary forces are mainly driven by falling commodity prices, a low inflation environment worldwide, a stable exchange rate and spillovers from the government’s fiscal consolidation process. As some disinflationary pressures are expected to wane in the mid- and long-term, inflation will gradually increase and by mid-2016 it is expected to trend closer to 4.0%.

The Executive Board praised the resilience of the Serbian economy and declared that the macroeconomic outlook has improved in recent months. The Bank assessed that the current monetary stance is appropriate to shore up Serbia’s economic recovery. The NBS’ next meeting is scheduled for 15 October.

FocusEconomics Consensus Forecast panelists expect the policy rate to end 2015 at 5.25%. For 2016, the panel sees the rate ending the year at 6.28%.

Author: Ricard Torné, Lead Economist

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Serbia Monetary Policy Chart

Serbia Monetary Policy September 2015

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

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