Serbia Monetary Policy September 2016


Serbia: NBS keeps policy rate on hold in September

September 8, 2016

At its 8 September monetary policy meeting, the Executive Board of the National Bank of Serbia (NBS) decided to leave the reference rate unchanged at 4.00%, where it has been since 7 July. This matched market expectations and is the lowest level since the NBS introduced an inflation targeting mandate in 2006.

In its brief press release, the Central Bank explained that it had based its decision on the economic impact of the past rate cuts, “persistent uncertainties in the international commodity and financial markets” and the current inflation forecast. The Bank said that inflation remains below target and is expected to return to the “target tolerance band” in the first half of 2017. Inflationary pressures are expected to resurface on the back of a gradual increase in aggregate demand, inflation abroad and the fading of the base effect of low energy prices.

The NBS pointed out that Serbia is capable of withstanding external shocks. In the Bank’s view, the Serbian economy has become more resilient thanks to the successful implementation of structural reforms and fiscal consolidation measures. In turn, fiscal imbalances have narrowed and the country’s macroeconomic prospects have improved notably.

The next monetary policy meeting is scheduled for 13 October.

FocusEconomics Consensus Forecast panelists expect the policy rate to end 2016 at 4.09%. For 2017, the panel sees the rate ending the year at 4.38%.

Author: Jean-Philippe Pourcelot, Economist

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Serbia Monetary Policy Chart

Serbia Monetary Policy September 2016

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

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