The Executive Board of the National Bank of Serbia (NBS) has decided to reduce the benchmark interest rate to 3.75%.
The reason for this decision is lower current inflation rate, and the reduced mid-term August projection of the inflation compared to the May one – the NBS says. Serbia’s inflation rate eased to 3.2 percent in July from 3.6% in June while core inflation fell further to 1.7%, suggesting low inflationary pressures.
Fiscal policy has also been more favourable than expected, the NBS said, with a budget surplus of around 2.1% in the first half of this year and since its August report, inflationary pressures have eased further due to lower import prices in dinars and the decreased risk premium, which reached its lowest level since it has been monitored.
In its latest inflation report, the NBS projected inflation would be lower this year and next year than in its previous report from May but still within its target tolerance band of 3.0%, plus/minus 1.5 percentage points.
As in its previous policy statement from August, the NBS said international financial markets are still dominated by uncertainties related to oil markets and the divergent monetary policies of leading central banks that may impact capital flows to emerging economies.
(Nova Ekonomija, 07.09.2017)
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