Central bank lowers reference interest rate

The Executive Board of the National Bank of Serbia (NBS) lowered on Friday the key policy rate by 0.5 percentage points and it now stands at 10.5 percent.

Izvor: Tanjug

Friday, 18.10.2013.

17:33

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BELGRADE The Executive Board of the National Bank of Serbia (NBS) lowered on Friday the key policy rate by 0.5 percentage points and it now stands at 10.5 percent. A statement from the NBS says the year-on-year inflation of 4.9 percent in September puts the inflation back inside the target tolerance band of 4 plus or minus 1.5 percent. Central bank lowers reference interest rate The Executive Board judges that the key contribution to the inflation’s return to the target came from monetary policy measures, the fall in primary agricultural commodity prices, relative stability of the dinar and low aggregate demand. Looking ahead, these factors will continue to moderate inflationary pressures and will help maintain inflation within the target band. Inflation expectations have fallen to their lowest level on record and are expected to stabilise within the target tolerance band in the foreseable future, the NBS said. "In its decision-making, the Executive Board was also guided by reduced risks associated with fiscal developments, following the announcement of fiscal adjustment measures. Low demand, together with the effects of fiscal consolidation measures, will serve as a strong disinflationary factor in the next year as well. Against such backdrop, the Executive Board assesses that the VAT increase, with its one-off impact, will generate weaker direct and indirect effects on inflation," the NBS stated. The Executive Board also expects positive trends in international financial markets as a result of the U.S. budget deal. The logo of the NBS Tanjug

Central bank lowers reference interest rate

The Executive Board judges that the key contribution to the inflation’s return to the target came from monetary policy measures, the fall in primary agricultural commodity prices, relative stability of the dinar and low aggregate demand. Looking ahead, these factors will continue to moderate inflationary pressures and will help maintain inflation within the target band.

Inflation expectations have fallen to their lowest level on record and are expected to stabilise within the target tolerance band in the foreseable future, the NBS said.

"In its decision-making, the Executive Board was also guided by reduced risks associated with fiscal developments, following the announcement of fiscal adjustment measures. Low demand, together with the effects of fiscal consolidation measures, will serve as a strong disinflationary factor in the next year as well. Against such backdrop, the Executive Board assesses that the VAT increase, with its one-off impact, will generate weaker direct and indirect effects on inflation," the NBS stated.

The Executive Board also expects positive trends in international financial markets as a result of the U.S. budget deal.

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