Serbian central bank cuts key interest rate

BELGRADE -- The Executive Board of the National Bank of Serbia (NBS) on Tuesday decreased the reference interest rate by 0.5 percentage points, to 9.5 percent.

(Tanjug, file)
(Tanjug, file)

The baord concluded that the year-on-year inflation in November reached 1.6 percent - below the lower bound of the target tolerance band (4±1.5 percent).

The central bank governor's office said in a statement that, in addition to monetary policy measures and relative stability of the exchange rate, "sharp disinflation in conditions of economic growth was driven also by the fall in food prices, low inflation expectations and weak domestic demand."

The board assessed that "inflation expectations have fallen to their historical low and that economic entities expect inflation to move within the target tolerance band in the coming period as well."

Medium-term inflation is expected to move close to the target, set at 4 percent until 2016, and monetary policy measures will be geared towards that end.

The next rate-setting meeting of the Executive Board will be held on January 16, it has been announced.