Serbia Monetary Policy January 2017


Serbia: NBS keeps policy rate unchanged in January

January 12, 2017

At its 12 January 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. The rate stands at its lowest level since the NBS introduced an inflation targeting mandate in 2006.

The Central Bank explained in its brief press release that it based its decision on the latest inflation data and international developments. The Central Bank commented that the inflation target has been lowered by 1.0 percentage points from 4.0%+/-1.5 percentage points to 3.0%+/-1.5 percentage points and that it expects inflation to remain low and stable, slowly moving within the target band in the first months of 2017. Inflationary pressures will increase due to the recovery of domestic demand, higher oil prices and the gradual increase in inflation in the Euro area. On the other hand, low food prices will drag on consumer prices. The Bank added that there is heightened uncertainty in the international commodity and financial markets. However, the risks emanating from these sources are expected to be mitigated by the ECB’s monetary policy easing. Moreover, the government’s structural reforms and the narrowing in external imbalances have improved the country’s macroeconomic prospects.

The next monetary policy meeting is scheduled for 14 February 2017.

FocusEconomics Consensus Forecast panelists expect the policy rate to end 2017 at 3.91%. For 2018, the panel sees the rate ending the year at 4.18%.

Author:, Economist

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