NBS raises key policy rate to 5.75 pct

BELGRADE - The National Bank of Serbia (NBS) Executive Board decided on Thursday to raise the key policy rate by 25 bp to 5.75 pct, keeping the deposit facility rate at 4.50 pct and raising the lending facility rate to 7.0 pct.

"In its decision-making, the Board was guided by the persistently high global cost-push pressures and imported inflation, despite the signs of easing, as well as the necessity to contain their second-round effects on price growth at home through inflation expectations and to impact a part of demand-side pressures," the central bank said in a statement.

"The NBS thus helps inflation to strike a downward path and retreat within the target tolerance band until the end of the projection horizon.

The transmission of the rate increases so far to the rates in the markets of money, loans and savings signals the effectiveness of the monetary policy transmission mechanism via the interest rate channel," it said.

"In January, inflation in Serbia measured 1.4 pct per month, and 15.8 pct y-o-y, in accordance with the Executive Board’s expectations," the NBS also said.