Serbia Monetary Policy March 2017


Serbia: NBS keeps policy rate unchanged in March

March 14, 2017

At its 14 March 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 since 7 July. 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.

While inflation has been steadily creeping up since mid-2016 on the back of rising global oil prices, it has been moving within the Bank’s target range of 3.0% plus/minus 1.5 percentage points since December and core inflation has remained persistently low. Moreover, though data released in February showed both domestic demand and the external sector growing healthily in Q4, risks to the economy remain tilted to the downside. In particular, diverging monetary policies across central banks worldwide—with the U.S. Federal Reserve, in particular, raising rates—has threatened to impact the country’s level of capital inflows.

In its statement, the NBS took a cautious stance toward ongoing global developments but did not offer any strong forward guidance. While the Bank takes a wait-and-see approach with regard to heightened uncertainty in global financial and energy markets, 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 11 April.

FocusEconomics Consensus Forecast panelists expect the policy rate to end 2017 at 4.25%, which is unchanged from last month’s forecast. In 2018, the panel expects the rate to end the year at 4.71%.

Author:, Economist

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Serbia Monetary Policy Chart

Serbia Monetary Policy March 2017

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

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