Central bank lowers key policy rate

The National Bank of Serbia (NBS) Executive Board decided on Thursday to lower the reference interest rate from 10 to 9.75 percent. Central bank lowers key policy rate The previous drop came on November 10, when the NBS decreased the reference interest rate from 10.75 to 10 percent. According to the NBS, the key disinflation factors include weakened pressure on food and regulated prices, as well as low aggregate demand. The continuing drop in inflation expectations is also contributing to disinflation. The Executive Board again expressed belief that year-to-year inflation will continue to drop and that inflation will return inside the target range in the first quarter of next year. Global fiscal and financial uncertainty are still pronounced, primarily due to the public debt crises in some eurozone countries. Under the circumstances, the NBS expects that Serbia's macroeconomic and financial stability will be maintained, among other things, by passing a budget in line with fiscal rules and the stand-by arrangement signed with the International Monetary Fund. The Executive Board will next review the reference interest on January 19, 2012, said the NBS. The reference interest rate has the role of the signal interest rate, and the starting interest rate, as it is used to determine other interest rates on the money market. It is the rate at which the NBS sells short-term securities with a maturity date of 14 days to business banks.

Central bank lowers key policy rate

The previous drop came on November 10, when the NBS decreased the reference interest rate from 10.75 to 10 percent.

According to the NBS, the key disinflation factors include weakened pressure on food and regulated prices, as well as low aggregate demand.

The continuing drop in inflation expectations is also contributing to disinflation. The Executive Board again expressed belief that year-to-year inflation will continue to drop and that inflation will return inside the target range in the first quarter of next year.

Global fiscal and financial uncertainty are still pronounced, primarily due to the public debt crises in some eurozone countries.

Under the circumstances, the NBS expects that Serbia's macroeconomic and financial stability will be maintained, among other things, by passing a budget in line with fiscal rules and the stand-by arrangement signed with the International Monetary Fund.

The Executive Board will next review the reference interest on January 19, 2012, said the NBS.

The reference interest rate has the role of the signal interest rate, and the starting interest rate, as it is used to determine other interest rates on the money market.

It is the rate at which the NBS sells short-term securities with a maturity date of 14 days to business banks.