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 at 5.75 pct and also keep the deposit facility rate and the lending facility rate unchanged at 4.5 pct and 7.0 pct, respectively, the NBS announced.

"In making this decision, the Executive Board was guided primarily by actual and expected inflation, as well as factors from the domestic and international environment underlying its movement. In previous months, Serbia’s y-o-y inflation has been under the sway of rising food prices due to adverse weather conditions, and stood at 4.7 pct in August. Core inflation (CPI excluding food, energy, alcohol and cigarettes), after being somewhat higher at the start of the year, fell to 4.5 pct in August, reflecting a slowdown in service price growth," the central bank said in a statement.

"The Executive Board estimates that, as a result of the Decree on Special Conditions for Conducting Trade in Certain Types of Goods, adopted by the Government to cap wholesale and retail trade margins at 20 pct for a six-month period, y-o-y inflation slowed significantly in September, to around the target midpoint. It is anticipated to continue moving at a relatively stable pace and at a similar level until the year end. Throughout the following year, further easing of inflationary pressures from the international environment is expected, based on lower cost-push pressures and the effect of the US dollar weakening against the euro," it also said.