Serbian Monetary Policy Now Paused

January 15, 2015

The Executive Board of the National Bank of Serbia left its policy interest rate at 8.0%.  Inflation has been below the 2.5-5.5% target since March 2014, and the policy rate was accordingly reduced three times in 2014 (May, June and November, each time by 50 basis points).  A statement released today says this about the outlook for inflation:

Inflation will return within the target tolerance band (4±1.5%) around mid-year as a result of past monetary policy measures, gradual weakening of the disinflationary effect of low food production costs and the anticipated adjustment of administered prices. Depressed domestic demand and low euro area inflation will help keep domestic inflation low and stable in the medium run.

Pending confirmation of this presumption, Serbian monetary policy remains in a holding pattern.  The next policy meeting is scheduled February 12.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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