The National Bank of Serbia (NBS) announced today that its Executive Board has decided to reduce the reference interest rate by 25 basis points, bringing it down to 5.75%. The rates for deposit and credit facilities have also been adjusted, to 4.5% and 7% respectively.
This decision follows a period of stable inflation, which has remained within the target range of 3 ± 1.5% since May. The NBS expects inflation to continue within this range and possibly decrease further towards the central target as global inflationary pressures ease and restrictive monetary measures have a disinflationary effect.
The NBS acknowledges that while easing monetary conditions is underway, the overall monetary policy remains restrictive. Future adjustments will depend on inflation data and macroeconomic trends. Despite a more gradual global inflation slowdown than previously anticipated, factors such as reduced energy and food prices, as well as improved global supply chains, are contributing to this trend.
Serbia’s inflation has been consistent with the NBS’s projections. In July, year-on-year inflation was recorded at 4.3%, with a monthly rate of 0.4%. The rise in inflation was influenced by global price increases in processed foods and services. The NBS anticipates inflation will slow to around 4% by year-end and gradually approach the 3% target in the following year.
The NBS also highlighted that the “Best Price” campaign, running until the end of October, aims to mitigate living costs and contribute to lower inflation. Economic growth in Serbia is supported by reduced inflation, increased real wages, and a declining unemployment rate. GDP growth was 4.3% in the first half of the year, driven by domestic demand, particularly household consumption and gross investments.
The Executive Board will continue to monitor domestic and international market trends, making future decisions based on data and assessments of monetary policy impacts. The next meeting to review the reference interest rate is scheduled for October 10.
