NBS Keeps Key Policy Rate Unchanged for the First Time Since April 2022

At its meeting today, the NBS Executive Board voted to keep the key policy rate at 6.00%. The rates on deposit and lending facilities were also kept unchanged, at 4.75% and 7.25%, respectively, the National Bank of Serbia (NBS) announced.

The Executive Board holds that the full-fledged effects of past monetary measures should be considered after the tightening of monetary conditions, on which the NBS embarked in October 2021 (first by raising the weighted average rate in reverse repo auctions, and since April 2022 by continuous key policy rate hikes – by a total of 500 bp).

– The Executive Board’s decision is consistent with the expectation that inflationary pressures would start to subside in the coming months, more substantially so as of the middle of this year. The NBS retains the option to continue monetary tightening going forward if so required by movements in the domestic and international environment. There is room to tighten monetary conditions also by adjusting the weighted average repo rate and by further raising the policy rate, depending on the nature of potential pressures. Hence, the NBS once again underscores the importance of the flexibility of its monetary framework – the NBS says.

The Executive Board’s decision to keep the key policy rate unchanged was adopted in conditions of gradual weakening of cost-push pressures from the international environment and easing of disruptions to global supply chains.

Prices in global energy markets also went down, primarily those of electricity and natural gas. This will dampen cost-push pressures globally and should also contribute to the slowing of domestic inflation in the coming period.

– Further, in conditions of global slackening of economic activity, primarily manufacturing in the euro area, our key trade partner, it is necessary to also ensure the continuity of our economic growth – they announce.

The next rate-setting meeting will take place on June 8, 2023.

Narodna banka Srbije Beograd

National Bank of Serbia

key policy rate

interest rates

increase in key policy rate