09.10.2025.
At its meeting today, the NBS Executive Board voted to keep the key policy rate at 5.75%. It also kept the deposit facility rate (4.5%) and the lending facility rate (7.0%) unchanged.
In making this decision, the Executive Board was guided primarily by actual and expected inflation, as well as factors from the domestic and international environment underlying its movement. In previous months, Serbia’s y-o-y inflation has been under the sway of rising food prices due to adverse weather conditions, and stood at 4.7% in August. Core inflation (CPI excluding food, energy, alcohol and cigarettes), after being somewhat higher at the start of the year, fell to 4.5% in August, reflecting a slowdown in service price growth.
The Executive Board estimates that, as a result of the Decree on Special Conditions for Conducting Trade in Certain Types of Goods, adopted by the Government to cap wholesale and retail trade margins at 20% for a six-month period, y-o-y inflation slowed significantly in September, to around the target midpoint. It is anticipated to continue moving at a relatively stable pace and at a similar level until the year end. Throughout the following year, further easing of inflationary pressures from the international environment is expected, based on lower cost-push pressures and the effect of the US dollar weakening against the euro. Furthermore, the new agricultural season should have a favourable impact on inflation, provided it turns to be better than this year’s. Working in the opposite direction will be the growth in disposable income for consumption and the low base effect from September this year. Nevertheless, according to the Executive Board’s estimate, headline inflation will continue to move within the target tolerance band of 3±1.5% next year.
Explaining its decision, the Executive Board emphasized that a cautious monetary policy stance remains necessary, as uncertainty in the international environment, though lower than in the first half of the year, is still pronounced. Geopolitical tensions continue to pose a risk to energy price growth. Although an improvement in the global business climate is expected in the period ahead as the tariff regime has stabilised, the concrete consequences of the higher tariffs remain to be seen, especially considering that trade increased this year ahead of their coming into force. When it comes to the monetary policy decisions of leading central banks, the Federal Reserve System (the Fed) lowered its key interest rates by 25 bp in September, and the continuation of the rate-cutting cycle is expected in the coming period in order to encourage faster economic growth. The European Central Bank again kept its rates unchanged in September, and it appears that the process of monetary policy easing is nearing its end.
According to SORS data, y-o-y GDP growth averaged 2% in the first half of the year, with a slightly higher growth rate in the second quarter compared to the first. The Executive Board expects economic growth to step up in the second half of the year, underpinned by the continued expansion of the automobile industry production and exports, as well as by the implementation of infrastructure projects under the “Leap into the Future – Serbia Expo 2027” programme. The Executive Board emphasizes that the expected acceleration of economic growth is supported by the maintained relative stability of the exchange rate and the provision of more favourable credit financing conditions, thanks to the effects of past monetary policy easing and the amendments to the Law on the Protection of Financial Services Consumers, which have resulted in double-digit y-o-y growth in lending activity to both businesses and households. Additional support to lending – and hence to overall economic activity – is expected from measures facilitating more favourable borrowing conditions for young first-time homebuyers, as well as for citizens with lower incomes and pensioners.
The Executive Board will continue to follow and analyse developments in the domestic and international markets and make monetary policy decisions on a meeting-to-meeting basis depending on the incoming data, the outlook for inflation and its key factors, and the assessment of the effects of adopted monetary policy measures. In making its decisions, the Board will remain mindful of the preservation of financial stability and favourable growth prospects.
The next rate-setting meeting where economic developments will be considered is scheduled for 13 November.
Governor’s Office
