Second Serbian Central Bank Rate Hike

May 12, 2022

The National Bank of Serbia, which in April authorized its first interest rate hike in over ten years, just matched the 50-basis point size of that initial increase. A noted above, Serbian CPI inflation has accelerated more than threefold over the past year to 9.6% and is well above target. The new central bank interest rate level, 2.0%, is just 25 basis points below its pre-pandemic level. In 2020, such was cut from 2.25% to 1.0%. A statement released by the central bank’s executive board documents other actions taken since last October to make the monetary stance less accommodative and leaves its signal regarding possible future actions development-driven and therefore ambiguous.

Depending on geopolitical developments and the movement in key inflation factors from the domestic and international environment in the coming period, the NBS will estimate whether there is a need to tighten monetary conditions further or whether the effects of past tightening ensure a sustainable return of inflation within the target tolerance band over the projection horizon. Delivering price and financial stability in the medium term remains the NBS’s monetary policy priority, while supporting further economic growth and development, a further rise in employment and a favorable investment environment.

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



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