At its meeting yesterday, the Executive Board of the National Bank of Serbia (NBS) decided to keep the key policy rate at 5.75%, while also leaving the deposit facility rate at 4.5% and the lending facility rate at 7.0%.
In making this decision, the Executive Board primarily took into account both actual and expected inflation developments in the coming period, as well as risks stemming from the international environment that could affect inflation.
Year-on-year inflation continued to move within the target range (3±1.5%), falling below the central target value of 3% in June and declining further to 1.9% in July. Inflation recorded in previous months was lower than expected, primarily due to a good fruit and vegetable harvest, which affected the movement of their prices.
In view of this, as well as the fact that significant secondary effects of the energy shock have so far failed to materialize, the Executive Board expects inflation this year to be lower than projected in May and to remain within the 3±1.5% target range until the end of the projection period. Inflation is still expected to reach around 4% in September, primarily due to the low base effect from last year, following the implementation of a regulation limiting retail margins.
The outlook for economic activity has also improved. According to a preliminary estimate by the Statistical Office of the Republic of Serbia, real GDP growth accelerated to 3.6% year-on-year in the second quarter of 2026, following growth of 3.2% in the first quarter.
According to the Executive Board, the largest positive contribution came from the services sectors as a result of stronger private consumption, while the acceleration in growth was also supported by a recovery in activity in manufacturing, mining, construction and agriculture.
Although the effects so far of the escalation of the conflict in the Middle East and rising global oil prices on global inflation and economic activity have been smaller than initially expected, uncertainty about further developments remains high. The use of available energy reserves and the limited pass-through of the energy shock, supported by lower excise duties on petroleum products, have so far helped mitigate the effects on the domestic market.
However, if the conflict in the Middle East continues or geopolitical tensions intensify further, the possibility cannot be ruled out that the effects could spill over into production and transport costs, supply chains, capital flows and, consequently, inflation. For Serbia, as a small open economy that is heavily dependent on energy imports, it is necessary to continue monitoring these risks closely, the Executive Board stressed.
The National Bank of Serbia continues to pursue a cautious monetary policy while maintaining relative exchange-rate stability. The Executive Board will make its decisions based on incoming data and their impact on inflation developments. If it assesses that the rise in global oil prices is having more pronounced secondary effects on other prices through inflation expectations, the National Bank of Serbia will respond using all available instruments.
At yesterday’s meeting, the Executive Board adopted the August Inflation Report containing new macroeconomic projections, which will be presented in greater detail to the public at a press conference on August 19, when the monetary policy decisions will also be further explained.
The next meeting of the Executive Board, at which economic developments and prospects will be reviewed and a decision will be made on the key policy rate, will be held on September 10, 2026.
Source: Blic, 13.08.2026