National Bank of Serbia Pauses Interest Rate at 9.50%

The National Bank of Serbia held its 2-week repo rate unchanged at 9.50%.  The Bank said: "The key risks to inflation projection stem from the international environment due to the still unresolved crisis in the euro area, as well as from fiscal policy at home. Keeping the budget deficit within the framework earlier agreed with the IMF would serve as an additional safeguard of macroeconomic stability and leave more scope for future relaxation of monetary policy."

The Bank previously cut the interest rate by 25 basis points in January, 75 basis points in December and 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 7% in December, down from 8.7% in October, 10.5% in August, 12.1% in July, 12.7% in June, 13.4% in May, 14.7% in April, and just 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 Serbian Dinar (RSD) last traded around 82.21 against the US dollar.  The National Bank of Serbia next meets on the 8th of March this year.

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