National Bank of Serbia Interest Rate Increased to 5.0% from 4.5%

October 6, 2022

Officials at the National Bank of Serbia engineered their seventh consecutive rate hike today. The rate had been cut 125 basis points during 2020 and remained at just 1.0% until an initial 50-bp rate hike six months ago. There have been five half percentage point increases so far along with a pair of 25-bp moves at the July and August policy reviews. But Serbian inflation continues to swell, reaching a 135-month high of 13.2% in August versus 4.3% a year earlier and the central bank’s 3.0% medium-term target. The Executive Board seeks to reduce inflation to that target within its projection time horizon and is also concerned about the effect of mounting recessionary pressure in the euro area. There is a slight hint at the end of the Board’s statement that rate hikes could pause: “Depending on the global geopolitical situation and movement in key monetary and macroeconomic factors from the domestic and international environment in the period ahead, the NBS will assess if there is a need for further monetary tightening.”

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

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