Central bank cuts key policy rate to nine percent

The Executive Board of the National Bank of Serbia (NBS) Thursday lowered its key policy rate by 0.5 percentage points to nine percent.

Source: Tanjug

In making its decision, the Executive Board was guided by the fact that year-on-year inflation has been moving around the lower bound of the target tolerance band and that inflationary pressures have subsided significantly, the NBS said.

Medium-term inflation expectations of financial and real sectors are stable and within the band, it added.

Strong disinflationary pressures in the coming period will be generated by low aggregate demand, arising from, among other things, the credit downturn, adverse developments in the labour market and continuing low food production costs.

Trends in the foreign exchange market are stable, due not only to monetary policy measures, but the low current account deficit as well, the NBS said.

The Executive Board believes that the financial market has so far responded positively to the economic measures announced by the new Serbian government, which imply a commitment to vigorous and full implementation of fiscal policy measures.

This should stabilize inflation at a low level and create the room for further monetary policy easing, the NBS said.

Business & Economy

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