Serbian town in the winter

Serbia Monetary Policy March 2020

Serbia: Central Bank stands pat in March

The Executive Board of the National Bank of Serbia (NBS) held fire at its 11 March meeting, leaving the key policy rate unchanged at its all-time low of 1.00%. This marked the third consecutive hold after December’s 25-basis-point cut.

In deliberating its decision, the Bank noted the continued supportive effect of prior monetary and fiscal policy action. The economy showed resilience in the fourth quarter in the face of a deteriorating health situation, according to the Bank, and available data for the first quarter of this year showed that the recovery has likely gained traction. In addition, the Bank stated that the country’s vaccination program “will help the economy reach its pre-crisis levels in Q2 this year”. As such, the Bank deemed additional action unnecessary.

In its press release, the Bank reaffirmed its commitment to continue supporting price stability and economic growth by keeping a close watch on external and internal developments affecting both.

Jessica Murray, analyst at JPMorgan, commented:

“With inflation under control and gradually approaching the NBS target, we think the Bank can remain comfortably with interest rates on hold. The on hold stance is also supported by our bullish growth outlook; we expect real GDP to reach above 6% this year. We also note that depreciation pressures have faded, and mild appreciation pressure has returned to the dinar in February.”

The next meeting is scheduled for 13 April.

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