National Bank of Serbia holds rates in September

Central Bank remains on hold: At its meeting on 11 September, the National Bank of Serbia (NBS) decided to keep the key policy rate unchanged at 5.75%, where it has stood since September 2024. The decision was in line with market expectations.

Above-target inflation warrants hold: The decision to keep interest rates steady was primarily influenced by the recent uptrend in price pressures. Inflation rose from 3.8% in May to 4.6% in June and 4.9% in July—above the 1.5–4.5% tolerance band—largely due to adverse weather conditions affecting food prices. That said, the Bank expects inflation to moderate in September and to stabilize within the target range in Q4 thanks to price controls. Moreover, in 2026, the NBS expects inflation to cool further due to lower cost-push pressures from the international environment and a weaker dollar against the euro.

NBS to cut rates by year-end: The Bank did not provide specific forward guidance on the future direction of interest rates. About half of our panelists project the NBS will cut rates by 25–75 basis points by end-2025, while the rest expect the Bank to stand pat. The next rate-setting meeting is scheduled for 9 October.

Panelist insight: Mate Jelic, analyst at Erste Bank, commented: “For now, policymakers are holding their restrictive stance, weighing the risk of renewed shocks from energy markets, geopolitics, and currency swings against the gradual cooling of domestic price growth. We expect the NBS will remain on the cautious side for the time being, as inflation has proven to be quite stubborn, and we don’t see room for further cuts in 2025.”

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