12/11/2026
At its meeting today, the NBS Executive Board decided to tighten monetary conditions by raising the key policy rate by 25 bp to 6%. The deposit and lending facility rates were also raised, to 4.75% and 7.25%, respectively.
In light of actual and expected inflation, as well as the risks stemming from the international and domestic environment that could affect the inflation trajectory, the Executive Board concluded that an increase in the key policy rate is an adequate and timely measure to prevent more pronounced second-round effects of the energy shock on other prices and ensure price stability in the medium run.
Prolonged uncertainty in the international environment, due to the conflict in the Middle East, has continued to affect developments in the global energy market, driving up not only the prices of oil, but also of natural gas and electricity. Moreover, oil inventories, used during the first months of the conflict to mitigate price pressures, have gradually been depleted, further intensifying pressures in the global energy market. Refining margins have also increased, particularly for diesel, due to the damage and destruction of refining capacities in the Middle East and Russia. Although the effects of the energy shock on global inflation and economic activity have so far been relatively limited, the risks of broader spillovers are increasing, given that energy prices have remained elevated for an extended period. In such circumstances, higher energy costs could be passed through to a greater extent to production and transport costs, supply chains, inflation expectations, wages and the prices of other goods and services.
Y-o-y inflation rose to 4.1% in September, consistent with the Executive Board’s expectations, primarily reflecting the low base effect from the previous year for food and household chemical product prices subject to the margin capping decree. Inflation has also been driven by a y-o-y increase of over 17% in petroleum product prices, reflecting higher global oil prices. The increase would have been even more pronounced had the government not reduced excise duties on fuel. In the Executive Board’s estimate, the persistence of high energy prices, coupled with higher global prices of other primary commodities, elevated imported inflation and the low base effect for food prices this year, will lead to a further gradual increase in inflation, which is expected to exceed the upper bound of the target tolerance band of 3±1.5% next year. Nevertheless, inflation is expected to return within the target tolerance band by the end of 2027 and continue converging towards the target midpoint until the end of the projection horizon.
According to the flash SORS estimate, real GDP growth was even faster than anticipated in Q3 2026, measuring 4.0%. Growth was guided by rising service-sector activity, with agriculture and construction also providing a positive impulse. Owing to low water levels, which hampered electricity generation and transport, and to some extent disrupted production processes in the manufacturing industry, industrial production stagnated. The Executive Board expects this year’s growth to be higher than anticipated in August, measuring at least 3.5%, because Serbia’s economy has shown greater-than-expected resilience to developments in the international environment, but partly also because agricultural output exceeded expectations. At the same time, we have downgraded our growth projection for 2027 to 4.0% due to this year’s higher base, lingering geopolitical tensions and continued growth in global energy prices. Domestic demand should remain the key driver of economic activity growth in the coming period, with both consumption and investment making a positive contribution, supported by further growth in disposable income and implementation of infrastructure projects.
The NBS will continue to monitor and analyse trends in the domestic and international markets and make future monetary policy decisions on a meeting-to-meeting basis, depending on the incoming data. Delivering price and financial stability, along with support to further economic activity and employment growth, remains the monetary policy priority.
The next rate-setting meeting, where economic developments and outlook will be considered, will take place on 10 December.
Governor’s Office
