National Bank of Serbia Keeps Rate on Hold at 9.50%

The National Bank of Serbia kept its 2-week repo rate on hold at 9.50%.  The Bank said: "Given the inflation factors with a medium-term effect, such as low aggregate demand, rising import prices, risks stemming from the international environment and fiscal policy at home, the NBS Executive Board voted to keep the key policy rate on hold. The Executive Board continues to stress that keeping the budget deficit in line with statutory fiscal responsibility rules remains one of the key prerequisites for maintaining the country's macroeconomic stability."

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 5.6% in January , down from 7% in December, 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 84.45 against the US dollar.  The National Bank of Serbia next meets on the 12th of April this year.

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