Serbia Monetary Policy October 2018


Serbia: NBS stands pat in October

October 8, 2018

At its 8 October 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 the last seven months.

The Bank’s decision was mainly guided by well-anchored inflation expectations. Headline inflation has remained comfortably within the target band of 1.5%–4.5% since April and the NBS expects it to continue to fluctuate within the target band over the next two years, corroborated by economic agents’ inflation expectations well anchored at 3.0%. Moreover, the economy has been having one of its best performances in a decade, partly driven by the Bank’s past monetary policy easing and partly due to robust investment growth. As a result, the NBS judged its current stance appropriate to both achieve price stability and continue supporting economic growth.

The Bank did not provide clear forward guidance in its communiqué but did highlight the growing risks to the outlook stemming from trade protectionism, rising oil prices, and monetary policy normalization in advanced economies. Although any future rate moves will likely be closely related to international developments, the Bank feels the economy is better equipped to withstand any external shocks, thanks to improved macroeconomic fundamentals.

The next monetary policy meeting is scheduled for 8 November.

Serbia Interest Rate Forecast

Virtually all FocusEconomics Consensus Forecast panelists see the Bank raising rates at least once by the end of next year, in response to tighter monetary policy in key economies. FocusEconomics Consensus Forecast panelists expect the key policy rate to end 2018 at 3.02% and 2019 at 3.42%.


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Serbia Monetary Policy Chart

Serbia Monetary Policy October 2018

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

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