Serbia Monetary Policy October 2016


Serbia: NBS keeps policy rate unchanged in October

October 13, 2016

At its 13 October 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.

The Central Bank explained in its brief press release that it had based its decision on the latest inflation data and international developments. According to the NBS, inflation is expected to increase and return within the target tolerance band by mid-2017. The Bank’s accommodative monetary stance and increased domestic demand are supporting inflationary pressures at home, while recovering oil prices are exerting upward pressure from abroad. The NBS also took into account uncertainty in the international financial markets regarding future FED and ECB measures and their potential impact on global capital flows.

Despite heightened uncertainty, the NBS pointed out that Serbia is capable of withstanding external shocks. Following the successful implementation of structural reforms and fiscal consolidation measures, according to the Bank, external imbalances have narrowed and the economy has become more resilient to economic shocks.

The next monetary policy meeting is scheduled for 10 November.

FocusEconomics Consensus Forecast panelists expect the policy rate to end 2016 at 3.93%. For 2017, the panel sees the rate ending the year at 4.13%.

Author: Jean-Philippe Pourcelot, Economist

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Serbia Monetary Policy Chart

Serbia Monetary Policy October 2016

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

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