Serbia holds rate on uncertain market reaction to Fed

    Serbia's central bank left its key policy rate at 4.50 percent, citing the uncertain reaction to U.S. Federal Reserve's expected increase in interest rates by commodity and financial markets, particularly on the flow of capital to emerging economies.
    The National Bank of Serbia (NBS), which has slashed its rate by 350 basis points this year, added that the European Central Bank's (ECB) easing of its policy earlier this month would contribute to mitigate any impact of the Fed rate hike on markets.
    The NBS, which last month raised its 2015 growth forecast to 0.8 percent from 0.5 percent, added that progress in fiscal consolidation and reduced external imbalances was contributing to the relative stability of the dinar and also increasing the country's resistance to international shocks.
    Serbia's inflation rate was steady at 1.4 percent in October and September, below the central bank's target of 4.0 percent plus/minus 1.5 points, but is expected to return to the target range in the second half of 2016.

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