No Change in Serbia’s Central Bank Rate

September 12, 2013

The September meeting of the National Bank of Serbia’s Executive Board ended with a vote to leave the key policy rate at 11%, just as was done in July and August.  An eight-step 225-basis point tightening begun in June 2012 ended in February 2013 at 11.75% but was followed by cuts of 50 bps in May and 25 bps in June.  In explaining why the rate had not been reduced additionally, the released statement said, “

The Executive Board’s decision to keep the key policy rate on hold was swayed by risks arising from the international environment, relating primarily to the developments in international financial and commodity markets. Furthermore, after the Fed hinted at possible tapering of its quantitative easing program, investor aversion went up in May and June, fueling depreciation pressures in almost all countries of the region, Serbia included. An additional uncertainty is reflected in global oil price movements.

Despite these risks, officials project that inflation will settle back into its target band in 4Q13 and thereafter stay within the prescribed boundaries.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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