Will the National Bank of Serbia continue to tighten its monetary policy after a three-month break?

The European Central Bank halted a series of interest rate hikes in October, while the US Fed announced last week that it was keeping its benchmark interest rate at the same level as in September for the second time in a row.

Today, the National Bank of Serbia (NBS) is due to announce its decision on the benchmark interest rate, i.e. whether to keep it the same or increase it.

Ahead of the NBS Executive Board session, Serbian Finance Minister, Siniša Mali, said that the flash estimate of the State Statistics Office showed that inflation in October was at 8.5 percent, so the question is whether inflation has finally been subdued and how will this affect the central bank’s decision on benchmark interest rate?  

Professor of the Faculty of Economics in Belgrade, Ljubodrag Savić, says that reports about October inflation lack clarification on whether it is year-on-year, i.e. “month-to-month” inflation for October 2023 and 2022, or that it’s inflation for the past 10 months of this year. Still, he adds, it is evident that inflation has slowed down. “To answer the question about whether inflation has been defeated or not, I have to ask myself what inflation means to citizens, especially those who receive minimum wage and who spend most of their income on food, energy and utilities,” reminds Savić.

Referring to Minister Siniša Mali’s statement that the price discount campaign “Bolja Cena” (instigated by the Serbian government) significantly contributed to the reduction of inflation, Professor Savić said that he would be careful when interpreting statistical data in such a way.

When it comes to the NBS’s decision regarding monetary policy measures, Professor Savić believes that there is no reason to increase the benchmark interest rate and that it is unlikely that the central bank will decide on such a step now that the elections have been called.

The NBS increased the benchmark interest rate to 6.5 percent back in July, which has remained at that level ever since.

(Biznis.rs, 09.11.2023)


This post is also available in: Italiano

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