NBS keeps key policy rate unchanged at 6.50 pct

BELGRADE - The National Bank of Serbia (NBS) Executive Board decided on Thursday to keep the key policy rate on hold at 6.50 pct.

It did not change the rates on deposit (5.25 pct) and lending facilities (7.75 pct) either, the NBS said.

"The Board’s decision was motivated by the further easing of global inflationary pressures, the established downward trajectory of inflation at home and its expected return within the target band in mid-2024. Moreover, monetary conditions in the past period were tightened by means of the main instrument - the interest rate, and in September by increasing the required reserve ratio, with the full effects of these measures yet to play out. The transmission of past monetary tightening onto the interest rates in the money, lending and savings markets signals the effectiveness of the monetary policy transmission mechanism.

In making the decision, the Executive Board took into account the continued receding of global inflationary pressures. In the euro area, our key foreign trade partner, inflation continued to subside in November, thanks mostly to falling energy prices and subdued growth in the prices of food and services. In addition to reduced global inflation, the Executive Board also took account of the fact that global economic growth is still slow and below its long-term average, reflecting monetary policy tightening by central banks worldwide implemented in order to rein in inflation," the central bank said in a statement.