NBS keeps key policy rate at 4.5%
This decision was made in consideration of the expected effects of past key policy rate cuts and gradual trimming of the FX reserve requirement ratio on inflation movements in the period ahead in an environment of persistent external risks.
- Uncertainties over the coming period mostly relate to divergent monetary policies of leading world economies. An increase in the Fed funds rate could have a negative impact on liquidity in the international financial market, hindering capital flows to emerging markets - the NBS said in a release published on its website.
However, the Executive Board assesses that the resilience of the Serbian economy to the above external risks is bolstered by the effects of fiscal consolidation measures, better-than-anticipated growth prospects, reduced external imbalance and consistent implementation of the arrangement with the International Monetary Fund.
After reviewing current monetary and macroeconomic developments and projections, the Executive Board stated that inflationary pressures remain subdued, reflecting chiefly low inflation abroad, low prices of primary commodities in the international markets, relative stability of the exchange rate, positive effects of fiscal consolidation and a further fall in inflation expectations.
Y-o-y inflation is expected to temporarily return within the target tolerance band in early 2016 as a result of the drop-out from calculation of last year’s decrease in prices of petroleum products and cigarettes. A more durable stabilisation of inflation within the target band is expected from mid-2016.
At its meeting today, the Executive Board also adopted the November Inflation Report that will be presented to the public on Thursday, 19 November. The next rate-setting meeting of the Executive Board will be held on 10 December 2015.
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