Serbian central bank hikes key policy rate

The Executive Board of the National Bank of Serbia (NBS) on Thursday raised the reference interest rate from 10.75 percent to 10.95 percent.

Izvor: Tanjug

Thursday, 08.11.2012.

16:37

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BELGRADE The Executive Board of the National Bank of Serbia (NBS) on Thursday raised the reference interest rate from 10.75 percent to 10.95 percent. By increasing the level of restrictiveness, the monetary policy is reacting to the increased inflationary pressures and prevention of transfer of effects of price increase, primarily in the food sector, to other prices, the central bank released. Serbian central bank hikes key policy rate Together with other measures which NBS has already implemented, the higher reference interest rate should contribute to the drop of inter-annual inflation in the next year and its restoration to the target limits by the end of 2013. The inter-annual inflation continues to increase in keeping with NBS projections and it will remain above the upper limit of the allowed deviation from the target rate. The Executive Board stated that the increase of food prices caused by the weak agricultural season exerted the greatest influence on the inflation increase and its effects will stop with the new agricultural season. Other significant effects are embodied in the increase of VAT and excise duties and the expected growth of government-regulated prices. Low aggregate demand will also have a disinflation effect and the publication of the Draft fiscal strategy constitutes a clear signal about the government's resolution to carry out the fiscal consolidation program, NBS stated. The next session of the NBS Executive Board to adopt the decision on the reference interest rate will be staged on November 6. Tanjug

Serbian central bank hikes key policy rate

Together with other measures which NBS has already implemented, the higher reference interest rate should contribute to the drop of inter-annual inflation in the next year and its restoration to the target limits by the end of 2013.

The inter-annual inflation continues to increase in keeping with NBS projections and it will remain above the upper limit of the allowed deviation from the target rate.

The Executive Board stated that the increase of food prices caused by the weak agricultural season exerted the greatest influence on the inflation increase and its effects will stop with the new agricultural season. Other significant effects are embodied in the increase of VAT and excise duties and the expected growth of government-regulated prices.

Low aggregate demand will also have a disinflation effect and the publication of the Draft fiscal strategy constitutes a clear signal about the government's resolution to carry out the fiscal consolidation program, NBS stated.

The next session of the NBS Executive Board to adopt the decision on the reference interest rate will be staged on November 6.

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