Serbia’s central bank, NBS, said on Thursday it has decided to keep its key repo rate unchanged at 1.25%.
The decision was made in the light of the expected effects of monetary policy measures taken to mitigate the adverse economic impact of the coronavirus crisis, which caused a decline in dinar interest rates, NBS said in a statement following a rate-setting meeting of its executive board.
The NBS cut its key repo rate to 1.5% from 1.75% in April and slashed it further to 1.25% in June to counter the adverse consequences of the coronavirus outbreak on the economy.
In keeping the key policy rate unchanged, the executive board was also guided by the uncertainty in the commodity markets and the pace of economic recovery on a global scale.
The inflation is likely to move close to the lower end of the 1.5%-4.5% target band in the coming months before gradually approaching the target midpoint in the medium term under the impact of the recovery of demand supported by monetary and fiscal policy measures, the central bank said.
Serbia’s consumer prices rose by 2.0% year-on-year in July, after growing by 1.6% in June, official statistics show. On a monthly comparison basis, Serbia’s consumer price index (CPI) grew by 0.2% in July, after rising by 0.6% in June, according to figures published by the national statistical office.
The economic recovery of Serbia began in May, encouraged by the implemented monetary and fiscal policy measures, and was faster than expected in the majority of production and service sectors. The central bank expects the recovery to continue in the period ahead, also supported by a rebound in external demand, signaled by the leading euro area economic activity indicators.
The NBS will hold its next rate-setting meeting on September 10.
