Serbia Monetary Policy April 2017


Serbia: NBS holds policy rate steady at 4.00% in April

April 11, 2017

At its 11 April monetary policy meeting, the Executive Board of the National Bank of Serbia (NBS) left the key policy rate unchanged at 4.00%, where it has been for nine months. Market analysts had expected the Bank to keep the policy rate steady, despite rising inflationary pressures. The rate stands at its lowest level since the Bank introduced an inflation targeting mandate in 2006.

Inflation has been steadily rising since mid-2016 on the back of higher global oil prices, and it has been moving within the Bank’s target range of 3.0% plus/minus 1.5 percentage points since December. However, core inflation has remained persistently low. Data released recently for March showed both imports and exports growing healthily, suggesting that domestic demand has been keeping pace with the growing global economy into Q1. Moreover, the downside risks for the economy are largely external. In particular, diverging monetary policies across central banks worldwide could soon threaten to impact capital flows into the country.

The NBS took a cautious stance toward ongoing global developments in its statement, but did not offer any strong forward guidance. The Bank plans to continue with its wait-and-see approach in regard to heightened uncertainty in global financial and energy markets, though it is optimistic that an improving balance sheet will permit the economy to weather any adverse impacts.

The next monetary policy meeting is scheduled for 12 May.

FocusEconomics Consensus Forecast panelists expect the policy rate to end 2017 at 4.25%, which is down 0.1 percentage points from last month’s forecast. In 2018, the panel expects the rate to end the year at 4.61%.

Author:, Economist

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Serbia Monetary Policy Chart

Serbia Monetary Policy May 2017

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

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