Serbia’s central bank raised its key interest rate for the seventh straight time in its October meeting in order to cool rising inflationary pressures that is posing a threat to the current economic growth.
The executive board decided to increase the reference rate by 50 bps to 4.00 percent, in line with expectations.
The previous hike was the same 50 basis points in September.
Besides, both the rate on deposit facilities and the rate on credit facilities were raised by the same amount, to 3 percent and 5 percent, respectively.
Recent data showed that Serbia’s inflation accelerated to 13.2 percent amid rising food and energy prices due to challenging global conditions.
The National Bank of Serbia has been steadily tightening monetary conditions on the domestic market since October of last year, taking into account the expansion of economic activity.
The bank projects inflation to be at the greatest extent in September and may be lower at the end of this year.
The continuation of the downward path of inflation is expected in the next year as well, and a return to the target limits by the end of the projection period.
Depending on the global geopolitical situation and the movement of key monetary and macroeconomic factors from the domestic and international environment in the coming period, the National Bank of Serbia said policymakers will assess whether there is a need for additional tightening of monetary conditions.
Monetary policy will continue to highlight ensuring medium-term price and financial stability while supporting further economic growth, the bank said in a statement.
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