Key Policy Rate Kept on Hold
At today’s meeting, the NBS Executive Board voted to keep the key policy rate on hold, at 3.5%. In making the decision, the Executive Board was guided by the new, February inflation projection and its factors, and the effects of past monetary policy easing.
In December, inflation stood at the target midpoint of 3.0% y-o-y, this being its average value in 2017. Under the February central projection as well, year-on-year inflation will continue to move within the target tolerance band until the end of the projection horizon (in the next two years).
The Executive Board underscored that monetary policy caution was still mandated by developments in the international commodity and financial markets. The global prices of primary commodities, particularly oil, rose in recent months, and their movement in the period ahead is also uncertain. Also, uncertainty in the international financial market over the divergence of monetary policies of the leading central banks – the Fed and the European Central Bank, still prevails, which may affect global capital flows towards emerging economies, including Serbia. Nevertheless, the Executive Board points out that the resilience of our economy to potential negative impacts from the international environment has increased, owing to the strengthening of domestic macroeconomic fundamentals and a more favourable outlook for the period ahead.
At today’s meeting, the NBS Executive Board adopted the February Inflation Report, which will be presented to the public on Wednesday, 14 February. On this occasion, monetary policy decisions and the underlying macroeconomic developments will be explained in more detail.