Serbia Central Bank Cuts Rate a Further 25bps to 9.75%

The National Bank of Serbia cut its 2-week repo rate by 25 basis points to 9.75% from 10.00% previously.  The Bank said: "The key disinflationary factors, both now and in the foreseeable future, will be weaker cost-push pressures arising from administered and food prices as well as low aggregate demand. The process of disinflation will be further aided by the continued drop in inflationary expectations. Inflation is expected to retreat within the target tolerance band in the first quarter of the next year."

The Bank also cut the interest rate by 75 basis points in November, 50bps in October, and 50bps in September, after pausing in August, while previously the Bank reduced the 2-week repo rate by 25 basis points to 11.75% at its July meeting, and cutting the rate 50 basis points at its June meeting to 12.00%.  Serbia reported inflation of 8.7% in October, down from 10.5% in August, compared to 12.1% in July, 12.7% in June, 13.4% in May, 14.7% in April, and above the bank's inflation target range of 3-6%.  

The IMF is forecasting 2011 GDP growth in Serbia of 2%, and 3% in 2012.  The Bank next meets on the 19th of January 2012.  The Serbian Dinar (RSD) last traded around 77.1 against the US dollar.

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