50-Basis Point Interest Rate Hike in Serbia

April 7, 2022

The National Bank of Serbia became the latest monetary authority to tighten its stance, raising its policy interest rate by a half percentage point to 1.50%. Such had been at 1.0% since a 25-basis point cut in December 2020 that culminated 125 basis points of reduction during the first year of the pandemic. Officials reacted to an acceleration of Serbian CPI inflation from 1.2% in February 2021 to a 104-month high of 8.8% a year later. A released statement explaining today’s move remains cautiously upbeat about the outlook for economic growth: “As the outbreak of the Ukraine crisis has dimmed the growth outlook both globally and for the euro area as our most important trade partner, downside risks to Serbia’s economic growth this year are now more pronounced, though the effects are estimated to depend mostly on the length of the crisis.” With inflation now roughly three times greater than the medium-term target range midpoint of 3%, restoring price stability as in most countries has become a policy priority.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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