Serbia’s dinar rose slightly Tuesday as the central bank increased its benchmark interest rate by 25 basis points to 10.75%, surprising some in the market that had expected rates to stay on hold, newswires reported.
The move reflected rising inflation and debt concerns in the country. Other central banks in CEE have cut rates over the past two weeks as growth slows across the region, but Serbia stands out as an exception because of a cocktail of rising inflation and debt and an economy sliding into recession amidst crisis in the euro-zone, its main trading partner.
“Considering that the increase of food prices and state-controlled prices is higher than expected and that inflationary expectations are on the rise, the Executive Board has decided to increase the benchmark rate to prevent the spillover… to other prices,” the Serbian bank said in a statement.
Source Balkans
