Serbia: NBS leaves rates unchanged in February
The Central Bank stands pat: At its meeting on 13 February, the Executive Board of the National Bank of Serbia (NBS) decided to maintain its policy rate at 5.75%. The decision aligned with market expectations and marked the fifth consecutive hold.
Global economic uncertainties keep the Bank in wait-and-see mode: In justifying its decision to stand pat instead of cutting rates, the Central Bank reiterated that the effects of its prior 75 basis point reduction had yet to fully permeate through the economy. Moreover, the NBS noted that while inflation has moved within the 1.5–4.5% target band, a cautious monetary policy approach was still needed as economic uncertainties in the international environment remain heightened, amid simmering geopolitical tensions and protectionism.
NBS to cut rates by end-2025: The Bank provided no specific forward guidance on future interest rate changes. Our Consensus is for the Bank to reduce rates by around 100 basis points by the end of 2025 as inflation continues to trend down. The next meeting is scheduled for 13 March.
Panelist insight: Mate Jelic, analyst at Erste Bank, commented:
“With expected gradual easing of inflation later in the year and hopefully more clarity on tariffs by the new U.S. administration, overall global policy uncertainty should drop as well allowing for further key rate cuts. We have pushed back regarding expectations for the first cut, which we now expect to see in May once global uncertainty eases a bit, while also now forecasting a total of 75bp in cuts in 2025 compared to 100bp we expected earlier.”