Key Policy Rate Kept at 6.5%

At its meeting today, the NBS Executive Board voted to keep the key policy rate on hold, at 6.50%. The rates on deposit (5.25%) and lending (7.75%) facilities also remained unchanged. The decision was motivated, according to the NBS, by further dissipation of global inflationary pressures, the downward trajectory of inflation at home and its expected return within the target tolerance band by mid-2024. As added, as the key policy rate and required reserve ratios were already lifted in the prior period, the relevant effects will continue to impact inflation going forward.

– The pass-through of past monetary tightening to the rates in the money, lending and savings markets, and subsiding one-year ahead inflation expectations of the financial and corporate sectors signal the efficiency of the monetary policy transmission mechanism. The Board also acknowledged the further easing of cost-push pressures and inflation going down globally. Though the global economy ended last year on a healthier footing than expected, its growth is below a long-term average and will slow this year. This, along with inflation’s decline, raises the expectations that leading central banks – the ECB and Fed may begin to ease their monetary policies earlier. Still, the labor market pressures remain strong, with these central banks highlighting them as the key factor that mandates caution in monetary policy conduct. Besides, given China’s impact on global trade and world prices of primary commodities, its macroeconomic outlook and the persisting geopolitical tensions remain the key sources of uncertainty that also call for caution – the press release says.

Narodna banka Srbije Beograd

Republički zavod za statistiku

National Bank of Serbia

NBS

Statistical Office of the Republic of Serbia

European Central Bank

ECB

Federal Reserve System

Fed

key policy rate

interest rates

inflation

inflation pressure

credits

loans

savings