NBS keeps key policy rate on hold

BELGRADE - The National Bank of Serbia (NBS) Executive Board decided on Thursday to keep the key policy rate at 5.75 pct.

The rates on deposit and lending facilities were also kept unchanged at 4.5 and 7.0 pct, respectively, the NBS said in a statement.

"In making the decision, the Board highlighted that the key policy rate has been cut by 75 bp in total since June and that the effects of past monetary policy easing will play out in the coming period as well," the central bank said.

"As underscored by the Board, although inflation has returned within the target tolerance band (3±1.5 pct) and continues to move therein, it is necessary to continue to pursue a cautious and restrictive monetary policy given somewhat greater resilience of inflationary pressures – notably core inflation, and in light of the unpredictable developments in the international environment, mounting geopolitical risks and their impact on global prices of energy and other primary commodities, including other macroeconomic indicators.

In the past two months, the crude oil price moved between 70 and 80 dollars per barrel, mainly under the impact of developments in the Middle East, while any significant increase in the global oil price was contained by solid oil inventories globally and the expected weakening of demand.

Still, concerns remain that the escalation of the Middle East conflict may disrupt oil flows from this key export region and push up global oil prices going forward.

This may reflect on global inflation and the pace of monetary easing by central banks, as well as financing conditions in the international market," it also said.