National Bank of Serbia Monetary Policy Not Changed

April 17, 2014

As also decided at prior meetings on January 16, February 13, and March 6, the Executive Board left its one-week repo rate unchanged at 9.5%, striking a balance between protecting financial stability and securing growth with price stability.  The key central bank interest rate had been cut 150 basis points in the final quarter of 2013 and by 75 bps earlier in May-June of last year when the second broad policy objective was front and center.  CPI inflation of 2.3% is well below the repo rate level, and fiscal tightening is producing some economic headwinds.  But the Ukraine crisis and Fed tapering pose risks for eastern European currencies. 

In deciding to keep the key policy rate on hold, the Executive Board was guided by instability in international financial markets and heightened uncertainties surrounding the current geopolitical tensions. This may reflect on Serbia through contracted capital inflows and higher prices in global commodities markets, notably prices of energy and primary agricultural commodities.

The May Executive Board meeting is scheduled for the 8th.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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