At today’s session, the Executive Board of the National Bank of Serbia (NBS) decided to keep the reference interest rate at the level of 1.25 percent, it is stated in the announcement.
Due to a smaller decline in activity in the second quarter than expected, as well as better results during the third quarter, the NBS revised upwards the growth forecast of gross domestic product for this year, from minus 1.5 percent to minus 1 percent.
The Executive Board expects that the economic measures taken will continue to have a favorable effect on the conditions of financing the economy and citizens and the growth of their disposable income.
The recovery of investments, which was faster than expected, contributes to favorable trends even in the conditions of the pandemic.
“The preservation of production capacities and jobs, acceleration of the realization of infrastructure projects, as well as provided more favorable financing conditions, have greatly contributed to that,” the NBS statement reads.
The recovery from the crisis, driven by the growth of domestic and external demand next year, should be more than complete, with a growth rate of gross domestic product of about 6 percent.
The Executive Board emphasizes that inflation in Serbia remained at a low and stable level during the pandemic, as it has been in the past seven years.
Total inflation in September was 1.8 percent year-on-year, and core inflation was similar (1.7 percent).
According to the NBS projection, inflation will continue to move in the lower half of the target range, closer to the lower limit of the target, and with the expected further recovery of demand, during 2022 it will gradually approach the central value of the 3% target.
Such developments indicate that in the coming period there is room for additional measures of monetary relaxation.
Developments in the international commodity and financial markets continue to call for careful monetary policy, which, in addition to uncertainty about the course of the pandemic, also reflects geopolitical tensions in the world.
However, the Executive Board emphasizes the increased resilience of our economy to shocks from the international environment, as a result of responsible economic policy in previous years and an adequate response to the current global crisis.
Significant surpluses of dinar liquidity are still present in the banking sector, and the provision of additional funds should make financing conditions even more favorable through maintaining interest rates at low levels and encourage the growth of banks’ lending activity.
By organizing swap and repo auctions on a regular weekly basis (Mondays – swaps and Thursdays – repo auctions), banks are given the opportunity to obtain the required dinar liquidity for a period of three months on favorable terms, using foreign exchange or dinar securities as collateral.
The first auctions will be organized on November 16 (swaps) and November 19 (repo auctions), Nova Ekonomija reports.
