NBS keeps key policy rate unchanged

BELGRADE - The National Bank of Serbia (NBS) Executive Board decided on Thursday to keep the key policy rate at 6.00 pct, and the rates on deposit and lending facilities were also kept unchanged, at 4.75 pct and 7.25 pct, respectively.

"The Executive Board‘s decision is consistent with the expectation that inflationary pressures would start to subside in the coming months, more substantially so as of the middle of this year," the central bank said in a statement.

"The NBS retains the option to continue monetary tightening going forward if so required by movements in the domestic and international environment."

"By mitigating inflationary pressures, the NBS continuously contributes also to safeguarding the relative stability of the dinar exchange rate against the euro," it said.

"The Executive Board’s decision to keep the key policy rate unchanged was adopted in conditions of gradual weakening of cost-push pressures from the international environment and easing of disruptions to global supply chains. Prices in global energy markets also went down, primarily those of electricity and natural gas. This will dampen cost-push pressures globally and should also contribute to the slowing of domestic inflation in the coming period. Further, in conditions of global slackening of economic activity, primarily manufacturing in the euro area, our key trade partner, it is necessary to also ensure the continuity of our economic growth.

At the same time, by maintaining a relative stability of the dinar exchange rate against the euro, the NBS significantly helps to contain the spill-over effect of rising foreign prices on domestic prices and to preserve macroeconomic stability against the background of pronounced global uncertainty," it also noted.