Serbia Monetary Policy


Serbia: NBS cuts its policy rate for third consecutive meeting to a fresh record low in October

October 14, 2015

At its 14 October monetary policy meeting, the Executive Board of the National Bank of Serbia (NBS) decided to cut the reference rate by 50 basis points to 4.50%, 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 third consecutive month at this meeting and by 350 basis points since March.

In its accompanying statement, the NBS stated that inflation continued below the lower band of the Central Bank’s target of 4.0% plus/minus 1.5%. Disinflationary forces are mainly driven by falling commodity prices, a low inflation environment worldwide and a stable exchange rate. 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 Bank acknowledged that inflation expectations remain anchored within the NBS tolerance margin and that a loose monetary policy stance, both in the country and advanced economies, will prop up economic activity. The Executive Board praised again the resilience of the Serbian economy and declared that the macroeconomic outlook has improved in recent months. The NBS’ next meeting is scheduled for 12 November.

FocusEconomics Consensus Forecast panelists expect the policy rate to end 2015 at 4.50%. For 2016, the panel sees the rate ending the year at 5.54%.

Author: Ricard Torné, Lead Economist

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Serbia Monetary Policy Chart

Serbia Monetary Policy October 2015

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

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