Serbia’s central bank keeps key repo rate unchanged at 11%

By bne IntelliNews August 8, 2013

Serbia’s central bank left its one-week key repo rate unchanged at 11% for a second straight month, despite easing CPI inflation and better economic activity, citing high depreciation pressures on local dinar currency.

The latter were mainly triggered by higher risk aversion of international investors due to signals that the US Fed will lower the volumes of securities purchases and end its quantitative easing program, the bank noted.

The on-hold decision was expected by the market due to both external and domestic factors. In particular, Serbia’s political background remains uncertain after the government’s reshuffle resulted in a change in the ruling coalition while the country struggles to curb its rising budget deficit. In addition, the IMF warned in July against further monetary easing due to rising fiscal risks and exchange-rate pressures.

The NBS expects additional fiscal austerity and structural reforms to boost the country’s risk perception and lower depreciation pressures on the local currency in the near-term.

Serbia’s annual inflation slowed to 9.8% y/y in June from 9.9% the month before reflecting falling food prices. The central bank sees inflation retreating within its target tolerance band of 2.5% to 5.5% by October 2013. However, recent electricity and expected gas prices hike will likely put some upward pressures on prices as housing, water, electricity and gas account for over 16% of the CPI basket.

The recovery of the Serbian economy continued in the second quarter of the year, the NBS also noted. The country’s GDP is projected to expand by 2.0% this year following 1.7% contraction in 2012, on the back of rising exports which will offset subdued domestic demand.

The next rate-setting meeting will be held on September 12, 2013.

Related Articles

Belgrade mayor under pressure as ex-wife claims he bragged about role in Savamala demolitions

The ex-wife of Belgrade mayor Sinisa Mali has claimed that her former husband took part in the controversial demolition of buildings in the Savamala district, an area designated for the €3.2bn ... more

Serbia announces call for 25-year concession of Belgrade's Nikola Tesla airport

A public call was announced for a 25-year concession to operate Serbia’s largest airport, state-controlled Aerodrom Nikola Tesla (ANT), on February 10. The concession of ANT is seen as vital for ... more

Attempt to privatise Serbia’s Galenika falls through

Negotiations on a strategic partnership between Serbian state-owned pharmaceuticals company Galenika and a Russian-UK consortium have fallen through, the ministry of economy ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss