The Executive Board of the National Bank of Serbia (NBS) decided today to keep the reference interest rate at one percent, the NBS announced.
The Executive Board had in mind that the previously adopted monetary and fiscal policy measures are still stimulating and that an additional package of fiscal measures has been announced, it is stated in the announcement.
It is estimated that the “strong” support of the NBS and the Government to companies and citizens will ensure that the pre-crisis level of economic activity is reached in the second quarter of this year.
“Industrial production, retail trade and exports have already reached pre-crisis levels, and with further progress in the vaccination process, which has made Serbia one of the best countries in the world, we expect activity in other service sectors to fully recover,” pointed out the NBS.
The recovery of domestic demand, as estimated, will be contributed by the realization of infrastructure projects, favorable financing conditions achieved by the previous easing of monetary policy, and the fact that the labor market has been preserved even in the conditions of a pandemic.
According to the central bank, the resilience of the labor market and the importance of the package of economic measures are indicated by the growth of employment and the maintenance of the single-digit unemployment rate during the pandemic.
According to the Executive Board, the realization of the announced package of fiscal measures will be an additional stimulus to domestic demand and will accelerate the economic recovery, and the direct growth of exports this year should be contributed by foreign direct investment and the expected recovery of external demand.
The Executive Board pointed out that this is the eighth year that inflation in Serbia is firmly under control, at a low and stable level.
According to the NBS projection, year-on-year inflation will be in the lower half of the target range of three percent, with a deviation of plus or minus 1.5 percent. At the same time, its expected slight growth in the short term will be largely the result of higher prices for electricity and petroleum products due to higher prices for oil in the world.
It was pointed out that cautious monetary policy is still needed due to the growth of the world oil price since November last year, as well as other primary products due to the growth of expectations that the world economy is on the path of recovery.
The February report on inflation, which was adopted by the Executive Board today, will be published on February 18, and the next session of the Executive Board on the reference interest rate will be published on March 11, Novi Magazin reports.
