NBS keeps key policy rate at 5.75 pct

BELGRADE - The National Bank of Serbia (NBS) decided on Thursday to keep the key policy rate on hold at 5.75 pct, and the deposit and lending facility rates remained unchanged at 4.5 pct and 7 pct, respectively, the central bank announced.

"When making the decision, the Board noted that though inflation retreated significantly during 2023, and then stabilised as of mid-2024, a cautious monetary policy should still be pursued given that inflation at home is largely dependent on developments in global commodity and financial markets that still give rise to concerns sparked by uncertainty," the NBS said in a statement.

"On the one hand, the introduction of high tariffs and the uncertainty of policy going forward are dampening global growth prospects and driving down the prices of primary commodities, notably oil.

On the other hand, they increase the risks of a halt in global supply chains and a rise in global inflation. The Board also took into account the monetary policy accommodation by the ECB in the prior period, which should reflect on more favourable conditions of euro-indexed borrowing in Serbia.

Uncertainty as to the impact of US tariffs on euro area economy will affect the ECB’s decision on further monetary policy easing. Based on current announcements, the Fed will most likely be more cautious and refrain from trimming its rate for some time yet," it also said.