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2017-11-09 12:00:21.0

Key Policy Rate Kept on Hold

At today’s meeting, the NBS Executive Board decided to keep the key policy rate on hold, at 3.5%.

In making such decision, the Executive Board was guided by the new, November inflation projection and the movement in its key factors, the expected effects of past monetary policy easing, better economic performance in the third quarter and improved outlook.

As assessed by the Executive Board, inflationary pressures remain low, as indicated by the slowdown in headline and core inflation over the past months, as well as the inflation expectations of the financial and corporate sectors that are anchored within the NBS target band. The drought effects on food prices were weaker than expected. Lower import prices also impacted the slowdown in inflation. Further, since early 2017, fiscal trends have been much more favourable than expected. Risk premium fell to its lowest on record for Serbia, reflecting, in addition to global factors, stronger macroeconomic fundamentals at home.

The Executive Board expects inflation to continue to move within the target tolerance band of 3.0±1.5% in the coming period, and to be at a lower level in the first half of 2018 due to the high base effect from the prices of petroleum products and other products that underwent one-off price hikes early in the year. The expected rise in the prices of primary agricultural products and aggregate demand will act in the opposite direction.

At today’s meeting, the Executive Board adopted the November Inflation Report which will be presented to the public on Wednesday, 15 November, when monetary policy decisions and the underlying macroeconomic developments will be discussed in more detail.

The next rate-setting meeting will be held on 7 December.

Governor’s Office