10.09.2026.
At its meeting today, the NBS Executive Board voted to keep the key policy rate at 5.75%. It also kept the deposit facility (4.5%) and lending facility (7.0%) rates unchanged.
In making this decision, the Executive Board primarily took into account actual and expected inflation, as well as risks from the international environment that could affect its trajectory.
Y-o-y inflation continued to move within the target band (3±1.5%), and has been below the target midpoint again since June. In July, it stood at 1.9%, primarily owing to lower food prices, particularly those of fruit and vegetables, which, due to an exceptionally good new harvest, were 18% lower than in July last year. Against this background, and given the absence of any significant second-round effects thus far and the greater-than-expected resilience of our economy to the energy shock, the NBS August projection envisages inflation being lower this year than projected three months ago and remaining within the target band throughout the projection horizon, i.e. over the next two years. Moreover, bearing in mind the low base from last year due to the application of the decree capping trade margins, as well as the effects of rising global prices of energy and other primary commodities, we expect inflation to move around 4% from September this year, and remain there during 2027 as well, thereafter gradually declining towards the end of the projection horizon. As for y-o-y core inflation (measured by the change in the CPI excluding food, energy, alcohol and cigarettes), its intensity and structure have not changed significantly since September last year, and it is moving around the upper bound of the 4.5% target, which was also its level in July this year.
Expectations regarding economic activity are also rosier, given that data from the Serbian Statistical Office show that real GDP growth in Q2 2026 accelerated to 3.8% y-o-y, which is higher than the flash estimate (3.6%). According to the Executive Board’s estimate, the largest positive contribution came from the services sectors, as a result of private consumption growth, with the acceleration in economic growth also supported by the recovery of activity in manufacturing, mining, construction and agriculture. In the first half of the year, real GDP growth stood at 3.5% y-o-y. Due to better than expected economic activity outturns since the start of the year, the NBS revised its economic growth projection for 2026 upwards to 3.2% in August, while keeping the projection for 2027 at 4.5%. Key economic growth drivers should include domestic demand, with a positive impulse coming from both consumption and investment, which will be supported by higher disposable income and continued implementation of infrastructure projects under the “Leap into the Future – Serbia Expo 2027“ programme. In the labour market, according to the Labour Force Survey, the unemployment rate fell to an all-time low of 7.2% in Q2 2026.
Though the effects of conflict flare-up in the Middle East and rising oil prices on global inflation and economic activity have so far been less intense than initially expected, uncertainty regarding future developments is still elevated, particularly since global oil prices remain higher compared to their pre-conflict levels. The effects on petroleum product prices at home have so far been contained by the use of available energy inventories and the trimming of excises on petroleum products. However, if the conflict in the Middle East persists or geopolitical tensions escalate further, one cannot rule out the possibility of а spillover of effects onto production and transportation costs at the global level, as well as on supply chains, capital flows, and consequently inflation. For Serbia, as a small and open economy that is significantly dependent on energy imports, it is necessary to continue to closely monitor these risks, the Executive Board underlined.
The NBS continues to pursue a cautious monetary policy while maintaining relative stability of the exchange rate. Going forward, the Executive Board will make decisions based on incoming data and their implications for inflation outlook. If assessed that the increase in global oil prices had stronger second-round effects on other prices through inflation expectations, the NBS will respond using all available instruments.
The next rate-setting meeting will be held on 8 October 2026.
Governor's Office
