Serbian central bank increases key policy rate

BELGRADE The Executive Board of the National Bank of Serbia (NBS) met on Tuesday and decided to raise the reference interest rate to 10.75 percent from 10.50 percent. The board said in a statement that the degree of restrictiveness of the monetary policy in the coming period will depend on the success of curbing inflationary expectations, as well as the influence of external factors and effects of the fiscal consolidation. Serbian central bank increases key policy rate It was also announced that the year-on-year inflation in August went above the allowed margin and reached 7.9 percent. In view of the fact that food and regulated prices increased above their expected level, with inflationary expectations also higher, the central bank decided to raise the reference interest rate in order to prevent these price hikes from spilling over to other prices. At the same time, the bank said it expected positive effects from the fiscal stabilization regarding expenditures, which should result in less pressure on inflationary expectations and the exchange rate. According to the NBS projection, the inflation in Serbia will reach its peak in the first half of 2013, after which its rate is expected to be within the target range of four percent, plus/minus 1.5 percent. The next meeting of the NBS Executive Board has been scheduled for November 8. B92

Serbian central bank increases key policy rate

It was also announced that the year-on-year inflation in August went above the allowed margin and reached 7.9 percent.

In view of the fact that food and regulated prices increased above their expected level, with inflationary expectations also higher, the central bank decided to raise the reference interest rate in order to prevent these price hikes from spilling over to other prices.

At the same time, the bank said it expected positive effects from the fiscal stabilization regarding expenditures, which should result in less pressure on inflationary expectations and the exchange rate.

According to the NBS projection, the inflation in Serbia will reach its peak in the first half of 2013, after which its rate is expected to be within the target range of four percent, plus/minus 1.5 percent.

The next meeting of the NBS Executive Board has been scheduled for November 8.