NBS benchmark interest rate could rise to almost 5 per cent

The National Bank of Serbia (NBS) will decide today on a new increase in the benchmark interest rate.

The bank’s board of directors raised the benchmark interest rate in the previous five months, first three times by 0.5 per cent, and then in July and August by 0.25 per cent each, and it currently stands at 3 per cent.

Most analysts expect a further increase in the benchmark interest rate, although opinions are divided on how quickly the NBS should continue to tighten monetary policy. “I am not sure I understand the NBS, because it has announced that it expects inflation to slow down by the end of the year and there are no indications that this will happen. If this were to happen, the growth of interest rates should be gradual and, let’s say, by 0.25 percentage points at a time,’ assesses economist Vladimir Gligorov in an interview with Biznis.rs.

However, Gligorov, the long-time associate of the Vienna Institute for International Economic Studies, points out that the interest rate is important in the influx of foreign money, and therefore believes that the increase is likely to be higher.

“I don’t think the upper limit can be much below five per cent and the dynamics of growth will depend on what the European Central Bank does. Fiscal policy will bestricter, and people will have to see how to repay their loans,’ he explains on the possible effects of a further increase of the benchmark interest rate.

A meeting of the European Central Bank is also scheduled for today, at which a decision will be made on the further increase of the key interest rates. The main dilemma is, presumably, whether the new increase should be 0.5 or 0.75 per cent.

(Biznis.rs, 08.09.2022)


This post is also available in: Italiano

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