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Serbia keeps the key policy rate unchanged at 11%.

National Bank of Serbia's Executive Board decided to keep the key policy rate unchanged at 11%. The Board stated that the fall in Serbia's year-on-year inflation continues, largely owing to monetary policy measures and stabilisation in the food market. The weakening of inflationary pressures indicates that the trend will accelerate in the coming period and that inflation will return within the target tolerance band (4[+ or -]1.5 %) by October. The economic recovery that started in late 2012 has continued in 2013. The Executive Board estimates that the Serbian economy will grow 2% this year, led by rising exports. The sustainability of economic recovery is indicated by the easing of external imbalances and the current account deficit of 5.7% of GDP in the first half of the year. National Bank of Serbia's Executive Board believes that additional fiscal consolidation measures and the implementation of structural reforms will contribute to the further reduction in inflationary pressures and external imbalances, giving a positive boost to Serbia's investment risk perception.However, given the higher risk aversion of international investors, prompted by the Fed's hint at downsizing of the quantitative easing programme, which spurred a rise in the country's risk premium and depreciation pressures in Serbia and almost all countries in the region, the Executive Board decided to keep the key policy rate unchanged.The next rate-setting meeting will be held on 12 September 2013. Governor's Office National Bank of Serbia
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Publication:Balkan Business News
Date:Aug 9, 2013
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