NBS keeps key policy rate at 6.5 pct

BELGRADE - The National Bank of Serbia (NBS) Executive Board decided on Thursday to keep the key policy rate at 6.5 pct.

The rates on deposit and credit facilities also remained unchanged at 5.25 pct and 7.75 pct, respectively, the NBS said in a statement.

"The Board’s decision reflects a further easing of global inflationary pressures, the downward trajectory of inflation at home and its expected return within the NBS target band over the monetary policy horizon. The Board also took note of the past tightening of monetary conditions and the fact that the full effects of earlier hikes of key interest rates are yet to play out.

The pass-through of key policy rate increases so far to the rates in the markets of money, loans and savings signals the efficiency of the monetary policy transmission mechanism through the interest rate channel.

However, being determined to curb inflation, the NBS decided to withdraw a portion of high excess dinar liquidity via reserve requirements, and thus tighten monetary conditions additionally. The Board does not exclude the possibility of further monetary tightening, if necessary," it also said.