A Ninth and Unexpected Interest Rate Cut in Serbia

March 23, 2010

The National Bank of Serbia implemented its first policy interest rate reduction of 2010.  The two-week repo rate cut to 9.0% from 9.5% had not been anticipated.  The rate had crested at 17.75% in the final quarter of 2008 but was cut eight times in 2009.  The timing and amount of those cuts were 125 basis points in January, 150 bps on April 6, 100 bps on April 22, 100 bps in June, 100 bps in July, 100 bps in October, 100 bps in November and, most recently, 50 bps on December 29th.  CPI inflation is running marginally below target at 3.6%, and forecasts of real GDP growth in 2010 are running at 1.5-2% this year.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



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