Serbia Monetary Policy May 2019


Serbia: NBS maintains monetary policy course in April

April 9, 2019

At its 9 April monetary policy meeting, the Executive Board of the National Bank of Serbia (NBS) voted to keep the key policy rate unchanged at 3.00%, where it has been for one year.

Well-anchored inflation expectations were the key factor behind the Bank’s decision to hold the key policy rate at its latest meeting. While inflation climbed to 2.4% in February, it remained comfortably within the Bank’s tolerance band of 3.0% plus or minus 1.5 percentage points, and the NBS expects it to continue on a stable trajectory this year and next. The NBS noted that developments in global crude oil prices will remain a major driver of inflation moving forward.

The Bank noted that slower global growth is expected to moderate the pace of policy normalization from the Federal Reserve and the ECB, which should give the NBS more room to maneuver and raise the rate at an even more gradual pace than previously expected. Moreover, although still cautious about the potential secondary effect of capital outflows from monetary tightening in major economies, the Bank remained upbeat about Serbia’s increased resilience to economic shocks through its stronger fiscal stance and adequate coverage of the current account deficit in FDI inflows.

The next monetary policy meeting will be held on 9 May.

Serbia Interest Rate Forecast

The majority of FocusEconomics Consensus Forecast panelists now see the Bank holding the key policy rate steady through 2019 and then tightening gradually thereafter in 2020. Our panelists expect the key policy rate to end 2019 at 3.08% and 2020 at 3.52%.


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Serbia Monetary Policy Chart

Serbia Monetary Policy April 2019

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

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